Correlation Between IGO and Bayhorse Silver

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

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

Diversification Opportunities for IGO and Bayhorse Silver

0.27

Correlation Coefficient

IGO  Bayhorse Silver

Modest diversification

The 3 months correlation between IGO and Bayhorse is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Bayhorse Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayhorse Silver 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 Bayhorse Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayhorse Silver has no effect on the direction of IGO i.e., IGO and Bayhorse Silver go up and down completely randomly.

Pair Corralation between IGO and Bayhorse Silver

Assuming the 90 days horizon IGO Limited is expected to generate 0.21 times more return on investment than Bayhorse Silver. However, IGO Limited is 4.73 times less risky than Bayhorse Silver. It trades about -0.11 of its potential returns per unit of risk. Bayhorse Silver is currently generating about -0.04 per unit of risk. If you would invest  601.00  in IGO Limited on December 29, 2024 and sell it today you would lose (106.00) from holding IGO Limited or give up 17.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

IGO Limited  vs.  Bayhorse Silver

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.

Bayhorse Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bayhorse Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with IGO and Bayhorse Silver

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

The idea behind IGO Limited and Bayhorse Silver 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.