Correlation Between IGG and PureTech Health

Can any of the company-specific risk be diversified away by investing in both IGG and PureTech Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IGG and PureTech Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IGG Inc and PureTech Health plc, you can compare the effects of market volatilities on IGG and PureTech Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IGG with a short position of PureTech Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGG and PureTech Health.

Diversification Opportunities for IGG and PureTech Health

0.59

Correlation Coefficient

IGG  PureTech Health

Very weak diversification

The 3 months correlation between IGG and PureTech is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding IGG Inc and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health plc and IGG is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on IGG Inc are associated (or correlated) with PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of IGG i.e., IGG and PureTech Health go up and down completely randomly.

Pair Corralation between IGG and PureTech Health

If you would invest  313.00  in PureTech Health plc on September 13, 2024 and sell it today you would earn a total of  0.00  from holding PureTech Health plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

IGG Inc  vs.  PureTech Health plc

IGG Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IGG Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, IGG reported solid returns over the last few months and may actually be approaching a breakup point.

PureTech Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PureTech Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, PureTech Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IGG and PureTech Health

The main advantage of trading using opposite IGG and PureTech Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGG position performs unexpectedly, PureTech Health can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PureTech Health will offset losses from the drop in PureTech Health's long position.

The idea behind IGG Inc and PureTech Health plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.