Correlation Between IGO and Aclara Resources

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

By analyzing existing cross correlation between IGO Limited and Aclara Resources, you can compare the effects of market volatilities on IGO and Aclara Resources 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 IGO with a short position of Aclara Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Aclara Resources.

Diversification Opportunities for IGO and Aclara Resources

-0.61

Correlation Coefficient

IGO  Aclara Resources

Excellent diversification

The 3 months correlation between IGO and Aclara is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Aclara Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aclara Resources and IGO 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 IGO Limited are associated (or correlated) with Aclara Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aclara Resources has no effect on the direction of IGO i.e., IGO and Aclara Resources go up and down completely randomly.

Pair Corralation between IGO and Aclara Resources

Assuming the 90 days horizon IGO Limited is expected to under-perform the Aclara Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 1.9 times less risky than Aclara Resources. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Aclara Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Aclara Resources on December 1, 2024 and sell it today you would earn a total of  4.00  from holding Aclara Resources or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

IGO Limited  vs.  Aclara Resources

IGO Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days IGO Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Aclara Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aclara Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aclara Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IGO and Aclara Resources

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

The idea behind IGO Limited and Aclara Resources 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.