Correlation Between Ivanhoe Electric and Lsb Industries

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

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

Diversification Opportunities for Ivanhoe Electric and Lsb Industries

0.06

Correlation Coefficient

Ivanhoe Electric  Lsb Industries

Significant diversification

The 3 months correlation between Ivanhoe and Lsb is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Electric and Lsb Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsb Industries and Ivanhoe Electric 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 Electric are associated (or correlated) with Lsb Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsb Industries has no effect on the direction of Ivanhoe Electric i.e., Ivanhoe Electric and Lsb Industries go up and down completely randomly.

Pair Corralation between Ivanhoe Electric and Lsb Industries

Allowing for the 90-day total investment horizon Ivanhoe Electric is expected to under-perform the Lsb Industries. In addition to that, Ivanhoe Electric is 1.06 times more volatile than Lsb Industries. It trades about -0.03 of its total potential returns per unit of risk. Lsb Industries is currently generating about -0.03 per unit of volatility. If you would invest  758.00  in Lsb Industries on December 27, 2024 and sell it today you would lose (75.00) from holding Lsb Industries or give up 9.89% of portfolio value over 90 days.

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

Ivanhoe Electric  vs.  Lsb Industries

Ivanhoe Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivanhoe Electric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Lsb Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lsb Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ivanhoe Electric and Lsb Industries

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

The idea behind Ivanhoe Electric and Lsb Industries 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.