Correlation Between Ivanhoe Mines and Arbor Metals

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

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

Diversification Opportunities for Ivanhoe Mines and Arbor Metals

0.27

Correlation Coefficient

Ivanhoe Mines  Arbor Metals

Modest diversification

The 3 months correlation between Ivanhoe and Arbor is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Mines and Arbor Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Metals Corp 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 Arbor Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Metals Corp has no effect on the direction of Ivanhoe Mines i.e., Ivanhoe Mines and Arbor Metals go up and down completely randomly.

Pair Corralation between Ivanhoe Mines and Arbor Metals

Assuming the 90 days horizon Ivanhoe Mines is expected to generate 0.11 times more return on investment than Arbor Metals. However, Ivanhoe Mines is 8.82 times less risky than Arbor Metals. It trades about -0.4 of its potential returns per unit of risk. Arbor Metals Corp is currently generating about -0.36 per unit of risk. If you would invest  1,413  in Ivanhoe Mines on October 8, 2024 and sell it today you would lose (206.00) from holding Ivanhoe Mines or give up 14.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Ivanhoe Mines  vs.  Arbor Metals Corp

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. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Arbor Metals Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Metals Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Arbor Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ivanhoe Mines and Arbor Metals

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

The idea behind Ivanhoe Mines and Arbor Metals Corp 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 Stocks Directory module to find actively traded stocks across global markets.