Correlation Between Trilogy Metals and Ivanhoe Mines

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

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

Diversification Opportunities for Trilogy Metals and Ivanhoe Mines

-0.61

Correlation Coefficient

Trilogy Metals  Ivanhoe Mines

Excellent diversification

The 3 months correlation between Trilogy and Ivanhoe is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Trilogy Metals and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines and Trilogy Metals 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 Trilogy Metals 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 Trilogy Metals i.e., Trilogy Metals and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between Trilogy Metals and Ivanhoe Mines

Considering the 90-day investment horizon Trilogy Metals is expected to generate 1.4 times more return on investment than Ivanhoe Mines. However, Trilogy Metals is 1.4 times more volatile than Ivanhoe Mines. It trades about 0.15 of its potential returns per unit of risk. Ivanhoe Mines is currently generating about -0.05 per unit of risk. If you would invest  110.00  in Trilogy Metals on December 21, 2024 and sell it today you would earn a total of  52.00  from holding Trilogy Metals or generate 47.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Trilogy Metals  vs.  Ivanhoe Mines

Trilogy Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trilogy Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Trilogy Metals reported solid returns over the last few months and may actually be approaching a breakup point.

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. Despite latest weak 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 Trilogy Metals and Ivanhoe Mines

The main advantage of trading using opposite Trilogy Metals and Ivanhoe Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trilogy Metals 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 Trilogy Metals 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.