Correlation Between IGO and York Harbour

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

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

Diversification Opportunities for IGO and York Harbour

0.35

Correlation Coefficient

IGO  York Harbour

Weak diversification

The 3 months correlation between IGO and York is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and York Harbour Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on York Harbour Metals 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 York Harbour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of York Harbour Metals has no effect on the direction of IGO i.e., IGO and York Harbour go up and down completely randomly.

Pair Corralation between IGO and York Harbour

Assuming the 90 days horizon IGO is expected to generate 19.04 times less return on investment than York Harbour. But when comparing it to its historical volatility, IGO Limited is 8.95 times less risky than York Harbour. It trades about 0.03 of its potential returns per unit of risk. York Harbour Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5.00  in York Harbour Metals on September 3, 2024 and sell it today you would lose (1.94) from holding York Harbour Metals or give up 38.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

IGO Limited  vs.  York Harbour Metals

IGO Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IGO Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, IGO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

York Harbour Metals

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with IGO and York Harbour

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

The idea behind IGO Limited and York Harbour Metals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.