Correlation Between IGO and Voltage Metals
Can any of the company-specific risk be diversified away by investing in both IGO and Voltage Metals 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 Voltage Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Voltage Metals Corp, you can compare the effects of market volatilities on IGO and Voltage Metals 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 Voltage Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Voltage Metals.
Diversification Opportunities for IGO and Voltage Metals
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IGO and Voltage is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Voltage Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltage Metals 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 Voltage Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltage Metals Corp has no effect on the direction of IGO i.e., IGO and Voltage Metals go up and down completely randomly.
Pair Corralation between IGO and Voltage Metals
Assuming the 90 days horizon IGO Limited is expected to under-perform the Voltage Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 7.22 times less risky than Voltage Metals. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Voltage Metals Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Voltage Metals Corp on December 3, 2024 and sell it today you would earn a total of 0.30 from holding Voltage Metals Corp or generate 30.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.49% |
Values | Daily Returns |
IGO Limited vs. Voltage Metals Corp
Performance |
Timeline |
IGO Limited |
Voltage Metals Corp |
IGO and Voltage Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IGO and Voltage Metals
The main advantage of trading using opposite IGO and Voltage Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO position performs unexpectedly, Voltage Metals 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 Voltage Metals will offset losses from the drop in Voltage Metals' long position.IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
Voltage Metals vs. Norra Metals Corp | Voltage Metals vs. E79 Resources Corp | Voltage Metals vs. Cantex Mine Development | Voltage Metals vs. Amarc Resources |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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