Correlation Between Irving Resources and Tectonic Metals

Can any of the company-specific risk be diversified away by investing in both Irving Resources and Tectonic Metals 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 Irving Resources and Tectonic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Irving Resources and Tectonic Metals

0.24

Correlation Coefficient

Irving Resources  Tectonic Metals

Modest diversification

The 3 months correlation between Irving and Tectonic is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Irving Resources and Tectonic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Metals and Irving Resources 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 Irving Resources are associated (or correlated) with Tectonic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Metals has no effect on the direction of Irving Resources i.e., Irving Resources and Tectonic Metals go up and down completely randomly.

Pair Corralation between Irving Resources and Tectonic Metals

Assuming the 90 days horizon Irving Resources is expected to generate 1.25 times more return on investment than Tectonic Metals. However, Irving Resources is 1.25 times more volatile than Tectonic Metals. It trades about 0.02 of its potential returns per unit of risk. Tectonic Metals is currently generating about -0.03 per unit of risk. If you would invest  27.00  in Irving Resources on September 3, 2024 and sell it today you would lose (1.00) from holding Irving Resources or give up 3.7% of portfolio value over 90 days.

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

Irving Resources  vs.  Tectonic Metals

Irving Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Irving Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Irving Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tectonic Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tectonic Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Irving Resources and Tectonic Metals

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

The idea behind Irving Resources and Tectonic Metals 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.