Correlation Between Ivanhoe Mines and Ivanhoe Energy

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

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

Diversification Opportunities for Ivanhoe Mines and Ivanhoe Energy

0.65

Correlation Coefficient

Ivanhoe Mines  Ivanhoe Energy

Poor diversification

The 3 months correlation between Ivanhoe and Ivanhoe is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Mines and Ivanhoe Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Energy and Ivanhoe Mines 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 Mines are associated (or correlated) with Ivanhoe Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Energy has no effect on the direction of Ivanhoe Mines i.e., Ivanhoe Mines and Ivanhoe Energy go up and down completely randomly.

Pair Corralation between Ivanhoe Mines and Ivanhoe Energy

Assuming the 90 days trading horizon Ivanhoe Mines is expected to under-perform the Ivanhoe Energy. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Mines is 1.07 times less risky than Ivanhoe Energy. The stock trades about -0.09 of its potential returns per unit of risk. The Ivanhoe Energy is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Ivanhoe Energy on December 30, 2024 and sell it today you would lose (193.00) from holding Ivanhoe Energy or give up 17.55% of portfolio value over 90 days.

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

Ivanhoe Mines  vs.  Ivanhoe Energy

Ivanhoe Mines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivanhoe Mines 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.

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.

Pair Trading with Ivanhoe Mines and Ivanhoe Energy

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

The idea behind Ivanhoe Mines and Ivanhoe Energy 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.