Correlation Between Rio2 and Integra Resources

Can any of the company-specific risk be diversified away by investing in both Rio2 and Integra 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 Rio2 and Integra Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rio2 and Integra Resources Corp, you can compare the effects of market volatilities on Rio2 and Integra 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 Rio2 with a short position of Integra Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio2 and Integra Resources.

Diversification Opportunities for Rio2 and Integra Resources

0.94

Correlation Coefficient

Rio2  Integra Resources

Almost no diversification

The 3 months correlation between Rio2 and Integra is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Rio2 and Integra Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra Resources Corp and Rio2 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 Rio2 are associated (or correlated) with Integra Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra Resources Corp has no effect on the direction of Rio2 i.e., Rio2 and Integra Resources go up and down completely randomly.

Pair Corralation between Rio2 and Integra Resources

Assuming the 90 days horizon Rio2 is expected to generate 1.07 times less return on investment than Integra Resources. But when comparing it to its historical volatility, Rio2 is 1.05 times less risky than Integra Resources. It trades about 0.18 of its potential returns per unit of risk. Integra Resources Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  124.00  in Integra Resources Corp on December 28, 2024 and sell it today you would earn a total of  53.00  from holding Integra Resources Corp or generate 42.74% return on investment over 90 days.

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

Rio2  vs.  Integra Resources Corp

Rio2

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rio2 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Rio2 showed solid returns over the last few months and may actually be approaching a breakup point.

Integra Resources Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Integra Resources Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Integra Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rio2 and Integra Resources

The main advantage of trading using opposite Rio2 and Integra Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio2 position performs unexpectedly, Integra 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 Integra Resources will offset losses from the drop in Integra Resources' long position.

The idea behind Rio2 and Integra 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.