Correlation Between Lode Gold and Ivanhoe Mines

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

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

Diversification Opportunities for Lode Gold and Ivanhoe Mines

0.28

Correlation Coefficient

Lode Gold  Ivanhoe Mines

Modest diversification

The 3 months correlation between Lode and Ivanhoe is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lode Gold Resources and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines and Lode Gold 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 Lode Gold Resources are associated (or correlated) with Ivanhoe Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Mines has no effect on the direction of Lode Gold i.e., Lode Gold and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between Lode Gold and Ivanhoe Mines

Assuming the 90 days horizon Lode Gold Resources is expected to generate 5.19 times more return on investment than Ivanhoe Mines. However, Lode Gold is 5.19 times more volatile than Ivanhoe Mines. It trades about 0.05 of its potential returns per unit of risk. Ivanhoe Mines is currently generating about 0.04 per unit of risk. If you would invest  50.00  in Lode Gold Resources on October 11, 2024 and sell it today you would lose (26.00) from holding Lode Gold Resources or give up 52.0% of portfolio value over 90 days.

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

Lode Gold Resources  vs.  Ivanhoe Mines

Lode Gold Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lode Gold Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lode Gold showed solid returns over the last few months and may actually be approaching a breakup point.

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Lode Gold and Ivanhoe Mines

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

The idea behind Lode Gold Resources and Ivanhoe Mines 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 CEOs Directory module to screen CEOs from public companies around the world.