Correlation Between Ivanhoe Energy and Lundin Mining

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

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

Diversification Opportunities for Ivanhoe Energy and Lundin Mining

0.4

Correlation Coefficient

Ivanhoe Energy  Lundin Mining

Very weak diversification

The 3 months correlation between Ivanhoe and Lundin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and Ivanhoe Energy 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 Ivanhoe Energy are associated (or correlated) with Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Lundin Mining go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Lundin Mining

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Lundin Mining. In addition to that, Ivanhoe Energy is 1.55 times more volatile than Lundin Mining. It trades about -0.06 of its total potential returns per unit of risk. Lundin Mining is currently generating about 0.0 per unit of volatility. If you would invest  1,221  in Lundin Mining on December 30, 2024 and sell it today you would lose (29.00) from holding Lundin Mining or give up 2.38% of portfolio value over 90 days.

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

Ivanhoe Energy  vs.  Lundin Mining

Ivanhoe Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivanhoe Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Lundin Mining

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ivanhoe Energy and Lundin Mining

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

The idea behind Ivanhoe Energy and Lundin 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.