Correlation Between Grande Portage and Ivanhoe Mines

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

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

Diversification Opportunities for Grande Portage and Ivanhoe Mines

0.3

Correlation Coefficient

Grande Portage  Ivanhoe Mines

Weak diversification

The 3 months correlation between Grande and Ivanhoe is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines and Grande Portage 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 Grande Portage Resources 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 Grande Portage i.e., Grande Portage and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between Grande Portage and Ivanhoe Mines

Assuming the 90 days horizon Grande Portage Resources is expected to under-perform the Ivanhoe Mines. In addition to that, Grande Portage is 1.87 times more volatile than Ivanhoe Mines. It trades about -0.21 of its total potential returns per unit of risk. Ivanhoe Mines is currently generating about -0.19 per unit of volatility. If you would invest  1,909  in Ivanhoe Mines on September 23, 2024 and sell it today you would lose (174.00) from holding Ivanhoe Mines or give up 9.11% of portfolio value over 90 days.

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

Grande Portage Resources  vs.  Ivanhoe Mines

Grande Portage Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Portage Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Ivanhoe Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivanhoe Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ivanhoe Mines is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grande Portage and Ivanhoe Mines

The main advantage of trading using opposite Grande Portage and Ivanhoe Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grande Portage 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 Grande Portage Resources 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.