Correlation Between IGI Life and Altern Energy

Can any of the company-specific risk be diversified away by investing in both IGI Life and Altern Energy 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 IGI Life and Altern Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IGI Life Insurance and Altern Energy, you can compare the effects of market volatilities on IGI Life and Altern Energy 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 IGI Life with a short position of Altern Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGI Life and Altern Energy.

Diversification Opportunities for IGI Life and Altern Energy

0.82

Correlation Coefficient

IGI Life  Altern Energy

Very poor diversification

The 3 months correlation between IGI and Altern is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding IGI Life Insurance and Altern Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altern Energy and IGI Life 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 IGI Life Insurance are associated (or correlated) with Altern Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altern Energy has no effect on the direction of IGI Life i.e., IGI Life and Altern Energy go up and down completely randomly.

Pair Corralation between IGI Life and Altern Energy

Assuming the 90 days trading horizon IGI Life is expected to generate 2.04 times less return on investment than Altern Energy. In addition to that, IGI Life is 1.58 times more volatile than Altern Energy. It trades about 0.03 of its total potential returns per unit of risk. Altern Energy is currently generating about 0.1 per unit of volatility. If you would invest  1,433  in Altern Energy on October 9, 2024 and sell it today you would earn a total of  958.00  from holding Altern Energy or generate 66.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	85.83%
Values	Daily Returns

IGI Life Insurance  vs.  Altern Energy

IGI Life Insurance

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IGI Life Insurance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IGI Life may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Altern Energy

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altern Energy are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Altern Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IGI Life and Altern Energy

The main advantage of trading using opposite IGI Life and Altern Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGI Life position performs unexpectedly, Altern Energy 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 Altern Energy will offset losses from the drop in Altern Energy's long position.

The idea behind IGI Life Insurance and Altern Energy 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 Commodity Directory module to find actively traded commodities issued by global exchanges.