Correlation Between Ivanhoe Electric and First Trust

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

By analyzing existing cross correlation between Ivanhoe Electric and First Trust Exchange Traded, you can compare the effects of market volatilities on Ivanhoe Electric and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Electric and First Trust.

Diversification Opportunities for Ivanhoe Electric and First Trust

-0.51

Correlation Coefficient

Ivanhoe Electric  First Trust

Excellent diversification

The 3 months correlation between Ivanhoe and First is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Electric and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Exchange has no effect on the direction of Ivanhoe Electric i.e., Ivanhoe Electric and First Trust go up and down completely randomly.

Pair Corralation between Ivanhoe Electric and First Trust

Allowing for the 90-day total investment horizon Ivanhoe Electric is expected to under-perform the First Trust. In addition to that, Ivanhoe Electric is 25.63 times more volatile than First Trust Exchange Traded. It trades about 0.0 of its total potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.2 per unit of volatility. If you would invest  1,891  in First Trust Exchange Traded on September 18, 2024 and sell it today you would earn a total of  122.00  from holding First Trust Exchange Traded or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	41.01%
Values	Daily Returns

Ivanhoe Electric  vs.  First Trust Exchange Traded

Ivanhoe Electric

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Electric are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Ivanhoe Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

First Trust Exchange

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, First Trust is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ivanhoe Electric and First Trust

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

The idea behind Ivanhoe Electric and First Trust Exchange Traded 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.