Correlation Between IGO and Nevada King

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

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

Diversification Opportunities for IGO and Nevada King

-0.54

Correlation Coefficient

IGO  Nevada King

Excellent diversification

The 3 months correlation between IGO and Nevada is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Nevada King Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nevada King Gold 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 Nevada King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nevada King Gold has no effect on the direction of IGO i.e., IGO and Nevada King go up and down completely randomly.

Pair Corralation between IGO and Nevada King

Assuming the 90 days horizon IGO Limited is expected to generate 0.36 times more return on investment than Nevada King. However, IGO Limited is 2.8 times less risky than Nevada King. It trades about 0.06 of its potential returns per unit of risk. Nevada King Gold is currently generating about -0.02 per unit of risk. If you would invest  636.00  in IGO Limited on September 5, 2024 and sell it today you would earn a total of  44.00  from holding IGO Limited or generate 6.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

IGO Limited  vs.  Nevada King Gold

IGO Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IGO Limited are ranked lower than 4 (%) 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.

Nevada King Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nevada King Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental 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 Nevada King

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

The idea behind IGO Limited and Nevada King Gold 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.