Correlation Between Ivanhoe Mines and Skeena Resources

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

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

Diversification Opportunities for Ivanhoe Mines and Skeena Resources

0.08

Correlation Coefficient

Ivanhoe Mines  Skeena Resources

Significant diversification

The 3 months correlation between Ivanhoe and Skeena is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Mines and Skeena Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skeena Resources 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 Skeena Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skeena Resources has no effect on the direction of Ivanhoe Mines i.e., Ivanhoe Mines and Skeena Resources go up and down completely randomly.

Pair Corralation between Ivanhoe Mines and Skeena Resources

Assuming the 90 days trading horizon Ivanhoe Mines is expected to under-perform the Skeena Resources. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Mines is 1.07 times less risky than Skeena Resources. The stock trades about -0.07 of its potential returns per unit of risk. The Skeena Resources is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,406  in Skeena Resources on September 19, 2024 and sell it today you would lose (63.00) from holding Skeena Resources or give up 4.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Ivanhoe Mines  vs.  Skeena Resources

Ivanhoe Mines

Risk-Adjusted Performance

0 of 100

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

Skeena Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Skeena Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Skeena Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ivanhoe Mines and Skeena Resources

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

The idea behind Ivanhoe Mines and Skeena Resources 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.