Correlation Between Nucor Corp and Ivanhoe Electric

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

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

Diversification Opportunities for Nucor Corp and Ivanhoe Electric

0.36

Correlation Coefficient

Nucor Corp  Ivanhoe Electric

Weak diversification

The 3 months correlation between Nucor and Ivanhoe is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and Ivanhoe Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Electric and Nucor Corp 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 Nucor Corp are associated (or correlated) with Ivanhoe Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Electric has no effect on the direction of Nucor Corp i.e., Nucor Corp and Ivanhoe Electric go up and down completely randomly.

Pair Corralation between Nucor Corp and Ivanhoe Electric

Considering the 90-day investment horizon Nucor Corp is expected to under-perform the Ivanhoe Electric. But the stock apears to be less risky and, when comparing its historical volatility, Nucor Corp is 1.73 times less risky than Ivanhoe Electric. The stock trades about -0.39 of its potential returns per unit of risk. The Ivanhoe Electric is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  913.00  in Ivanhoe Electric on September 18, 2024 and sell it today you would lose (152.00) from holding Ivanhoe Electric or give up 16.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Nucor Corp  vs.  Ivanhoe Electric

Nucor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor Corp 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Ivanhoe Electric

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Electric are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Ivanhoe Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nucor Corp and Ivanhoe Electric

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

The idea behind Nucor Corp and Ivanhoe Electric 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.