Correlation Between Spire Global and Ivanhoe Mines

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

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

Diversification Opportunities for Spire Global and Ivanhoe Mines

0.08

Correlation Coefficient

Spire Global  Ivanhoe Mines

Significant diversification

The 3 months correlation between Spire and Ivanhoe is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines and Spire Global 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 Spire Global 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 Spire Global i.e., Spire Global and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between Spire Global and Ivanhoe Mines

Given the investment horizon of 90 days Spire Global is expected to under-perform the Ivanhoe Mines. In addition to that, Spire Global is 3.07 times more volatile than Ivanhoe Mines. It trades about -0.08 of its total potential returns per unit of risk. Ivanhoe Mines is currently generating about -0.14 per unit of volatility. If you would invest  1,561  in Ivanhoe Mines on December 2, 2024 and sell it today you would lose (188.00) from holding Ivanhoe Mines or give up 12.04% of portfolio value over 90 days.

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

Spire Global  vs.  Ivanhoe Mines

Spire Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spire Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Spire Global is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Ivanhoe Mines

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Spire Global and Ivanhoe Mines

The main advantage of trading using opposite Spire Global and Ivanhoe Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global 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 Spire Global 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.