Correlation Between Patriot Battery and IGO

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

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

Diversification Opportunities for Patriot Battery and IGO

-0.66

Correlation Coefficient

Patriot Battery  IGO

Excellent diversification

The 3 months correlation between Patriot and IGO is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Patriot Battery Metals and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Patriot Battery 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 Patriot Battery Metals are associated (or correlated) with IGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGO Limited has no effect on the direction of Patriot Battery i.e., Patriot Battery and IGO go up and down completely randomly.

Pair Corralation between Patriot Battery and IGO

Assuming the 90 days horizon Patriot Battery Metals is expected to under-perform the IGO. In addition to that, Patriot Battery is 2.89 times more volatile than IGO Limited. It trades about -0.08 of its total potential returns per unit of risk. IGO Limited is currently generating about 0.11 per unit of volatility. If you would invest  609.00  in IGO Limited on September 12, 2024 and sell it today you would earn a total of  71.00  from holding IGO Limited or generate 11.66% return on investment over 90 days.

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

Patriot Battery Metals  vs.  IGO Limited

Patriot Battery Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Patriot Battery Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic 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.

IGO Limited

Risk-Adjusted Performance

8 of 100

Good

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.

Pair Trading with Patriot Battery and IGO

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

The idea behind Patriot Battery Metals and IGO Limited 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.