Correlation Between Ivanhoe Energy and Metallic Minerals

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

By analyzing existing cross correlation between Ivanhoe Energy and Metallic Minerals Corp, you can compare the effects of market volatilities on Ivanhoe Energy and Metallic Minerals 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 Metallic Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Metallic Minerals.

Diversification Opportunities for Ivanhoe Energy and Metallic Minerals

-0.68

Correlation Coefficient

Ivanhoe Energy  Metallic Minerals

Excellent diversification

The 3 months correlation between Ivanhoe and Metallic is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Metallic Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metallic Minerals Corp 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 Metallic Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metallic Minerals Corp has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Metallic Minerals go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Metallic Minerals

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 27.51 times less return on investment than Metallic Minerals. But when comparing it to its historical volatility, Ivanhoe Energy is 1.69 times less risky than Metallic Minerals. It trades about 0.01 of its potential returns per unit of risk. Metallic Minerals Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Metallic Minerals Corp on December 21, 2024 and sell it today you would earn a total of  6.00  from holding Metallic Minerals Corp or generate 42.86% return on investment over 90 days.

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

Ivanhoe Energy  vs.  Metallic Minerals Corp

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 very healthy basic indicators, Ivanhoe Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Metallic Minerals Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metallic Minerals Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Metallic Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ivanhoe Energy and Metallic Minerals

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

The idea behind Ivanhoe Energy and Metallic Minerals Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.