Correlation Between Capstone Mining and Ivanhoe Mines

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

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

Diversification Opportunities for Capstone Mining and Ivanhoe Mines

0.93

Correlation Coefficient

Capstone Mining  Ivanhoe Mines

Almost no diversification

The 3 months correlation between Capstone and Ivanhoe is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines and Capstone Mining 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 Capstone Mining Corp are associated (or correlated) with Ivanhoe Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Mines has no effect on the direction of Capstone Mining i.e., Capstone Mining and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between Capstone Mining and Ivanhoe Mines

Assuming the 90 days horizon Capstone Mining is expected to generate 1.18 times less return on investment than Ivanhoe Mines. But when comparing it to its historical volatility, Capstone Mining Corp is 1.03 times less risky than Ivanhoe Mines. It trades about 0.08 of its potential returns per unit of risk. Ivanhoe Mines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,632  in Ivanhoe Mines on September 3, 2024 and sell it today you would earn a total of  253.00  from holding Ivanhoe Mines or generate 15.5% return on investment over 90 days.

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

Capstone Mining Corp  vs.  Ivanhoe Mines

Capstone Mining Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Mining Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Capstone Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Ivanhoe Mines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Mines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Ivanhoe Mines displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capstone Mining and Ivanhoe Mines

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

The idea behind Capstone Mining Corp and Ivanhoe Mines 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.