Correlation Between Ivanhoe Mines and Patriot Battery

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

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

Diversification Opportunities for Ivanhoe Mines and Patriot Battery

0.2

Correlation Coefficient

Ivanhoe Mines  Patriot Battery

Modest diversification

The 3 months correlation between Ivanhoe and Patriot is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Mines and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery Metals 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 Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of Ivanhoe Mines i.e., Ivanhoe Mines and Patriot Battery go up and down completely randomly.

Pair Corralation between Ivanhoe Mines and Patriot Battery

Assuming the 90 days horizon Ivanhoe Mines is expected to under-perform the Patriot Battery. But the otc stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Mines is 2.1 times less risky than Patriot Battery. The otc stock trades about -0.08 of its potential returns per unit of risk. The Patriot Battery Metals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  302.00  in Patriot Battery Metals on October 8, 2024 and sell it today you would lose (56.00) from holding Patriot Battery Metals or give up 18.54% of portfolio value over 90 days.

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

Ivanhoe Mines  vs.  Patriot Battery Metals

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.

Patriot Battery Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Patriot Battery 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 Ivanhoe Mines and Patriot Battery

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

The idea behind Ivanhoe Mines and Patriot Battery 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.