Correlation Between Nevada King and Ivanhoe Mines

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

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

Diversification Opportunities for Nevada King and Ivanhoe Mines

0.42

Correlation Coefficient

Nevada King  Ivanhoe Mines

Very weak diversification

The 3 months correlation between Nevada and Ivanhoe is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nevada King Gold and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines and Nevada King 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 Nevada King Gold 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 Nevada King i.e., Nevada King and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between Nevada King and Ivanhoe Mines

Assuming the 90 days horizon Nevada King is expected to generate 1.48 times less return on investment than Ivanhoe Mines. In addition to that, Nevada King is 1.86 times more volatile than Ivanhoe Mines. It trades about 0.02 of its total potential returns per unit of risk. Ivanhoe Mines is currently generating about 0.05 per unit of volatility. If you would invest  783.00  in Ivanhoe Mines on September 14, 2024 and sell it today you would earn a total of  487.00  from holding Ivanhoe Mines or generate 62.2% return on investment over 90 days.

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

Nevada King Gold  vs.  Ivanhoe Mines

Nevada King Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nevada King Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 nearly stable basic indicators, Ivanhoe Mines is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nevada King and Ivanhoe Mines

The main advantage of trading using opposite Nevada King and Ivanhoe Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nevada King 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 Nevada King Gold 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.