Correlation Between United States and Ivanhoe Electric

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

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

Diversification Opportunities for United States and Ivanhoe Electric

-0.63

Correlation Coefficient

United States  Ivanhoe Electric

Excellent diversification

The 3 months correlation between United and Ivanhoe is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Ivanhoe Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Electric and United States 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 United States Steel 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 United States i.e., United States and Ivanhoe Electric go up and down completely randomly.

Pair Corralation between United States and Ivanhoe Electric

Taking into account the 90-day investment horizon United States Steel is expected to generate 0.77 times more return on investment than Ivanhoe Electric. However, United States Steel is 1.29 times less risky than Ivanhoe Electric. It trades about 0.19 of its potential returns per unit of risk. Ivanhoe Electric is currently generating about -0.04 per unit of risk. If you would invest  3,110  in United States Steel on December 27, 2024 and sell it today you would earn a total of  1,190  from holding United States Steel or generate 38.26% return on investment over 90 days.

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

United States Steel  vs.  Ivanhoe Electric

United States Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, United States showed solid returns over the last few months and may actually be approaching a breakup point.

Ivanhoe Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivanhoe Electric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with United States and Ivanhoe Electric

The main advantage of trading using opposite United States and Ivanhoe Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.