Correlation Between Pilbara Minerals and IGO

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

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

Diversification Opportunities for Pilbara Minerals and IGO

0.65

Correlation Coefficient

Pilbara Minerals  IGO

Poor diversification

The 3 months correlation between Pilbara and IGO is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pilbara Minerals Limited and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Pilbara Minerals 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 Pilbara Minerals Limited 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 Pilbara Minerals i.e., Pilbara Minerals and IGO go up and down completely randomly.

Pair Corralation between Pilbara Minerals and IGO

Assuming the 90 days horizon Pilbara Minerals is expected to generate 1.83 times less return on investment than IGO. In addition to that, Pilbara Minerals is 1.04 times more volatile than IGO Limited. It trades about 0.06 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  231.00  in IGO Limited on May 5, 2025 and sell it today you would earn a total of  69.00  from holding IGO Limited or generate 29.87% return on investment over 90 days.

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

Pilbara Minerals Limited  vs.  IGO Limited

Pilbara Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pilbara Minerals Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Pilbara Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

IGO Limited

Risk-Adjusted Performance

OK

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. Despite nearly weak fundamental indicators, IGO reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pilbara Minerals and IGO

The main advantage of trading using opposite Pilbara Minerals and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pilbara Minerals 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 Pilbara Minerals Limited 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.