Correlation Between IGO and Commerce Resources

Can any of the company-specific risk be diversified away by investing in both IGO and Commerce 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 Commerce 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 Commerce Resources Corp, you can compare the effects of market volatilities on IGO and Commerce 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 Commerce Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Commerce Resources.

Diversification Opportunities for IGO and Commerce Resources

-0.28

Correlation Coefficient

IGO  Commerce Resources

Very good diversification

The 3 months correlation between IGO and Commerce is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Commerce Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Resources Corp 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 Commerce Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Resources Corp has no effect on the direction of IGO i.e., IGO and Commerce Resources go up and down completely randomly.

Pair Corralation between IGO and Commerce Resources

If you would invest  7.00  in Commerce Resources Corp on September 13, 2024 and sell it today you would lose (1.00) from holding Commerce Resources Corp or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

IGO Limited  vs.  Commerce Resources Corp

IGO Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IGO Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, IGO may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Commerce Resources Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Resources Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Commerce Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IGO and Commerce Resources

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

The idea behind IGO Limited and Commerce Resources Corp 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.