Correlation Between IGO and Silver Elephant

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

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

Diversification Opportunities for IGO and Silver Elephant

0.61

Correlation Coefficient

IGO  Silver Elephant

Poor diversification

The 3 months correlation between IGO and Silver is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Silver Elephant Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Elephant Mining 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 Silver Elephant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Elephant Mining has no effect on the direction of IGO i.e., IGO and Silver Elephant go up and down completely randomly.

Pair Corralation between IGO and Silver Elephant

Assuming the 90 days horizon IGO Limited is expected to under-perform the Silver Elephant. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 5.01 times less risky than Silver Elephant. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Silver Elephant Mining is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Silver Elephant Mining on September 12, 2024 and sell it today you would lose (1.00) from holding Silver Elephant Mining or give up 3.23% of portfolio value over 90 days.

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

IGO Limited  vs.  Silver Elephant Mining

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 latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Silver Elephant Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Elephant Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Silver Elephant reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IGO and Silver Elephant

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

The idea behind IGO Limited and Silver Elephant Mining 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.