Correlation Between IGO and Mundoro Capital

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

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

Diversification Opportunities for IGO and Mundoro Capital

0.45

Correlation Coefficient

IGO  Mundoro Capital

Very weak diversification

The 3 months correlation between IGO and Mundoro is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Mundoro Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundoro Capital 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 Mundoro Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundoro Capital has no effect on the direction of IGO i.e., IGO and Mundoro Capital go up and down completely randomly.

Pair Corralation between IGO and Mundoro Capital

Assuming the 90 days horizon IGO Limited is expected to generate 1.03 times more return on investment than Mundoro Capital. However, IGO is 1.03 times more volatile than Mundoro Capital. It trades about -0.01 of its potential returns per unit of risk. Mundoro Capital is currently generating about -0.01 per unit of risk. If you would invest  342.00  in IGO Limited on September 23, 2024 and sell it today you would lose (61.00) from holding IGO Limited or give up 17.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

IGO Limited  vs.  Mundoro Capital

IGO Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mundoro Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mundoro Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with IGO and Mundoro Capital

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

The idea behind IGO Limited and Mundoro Capital 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.