Correlation Between Gold Fields and Ivanhoe Electric
Can any of the company-specific risk be diversified away by investing in both Gold Fields 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 Gold Fields and Ivanhoe Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Fields Ltd and Ivanhoe Electric, you can compare the effects of market volatilities on Gold Fields 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 Gold Fields with a short position of Ivanhoe Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Ivanhoe Electric.
Diversification Opportunities for Gold Fields and Ivanhoe Electric
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Ivanhoe is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Ivanhoe Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Electric and Gold Fields 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 Gold Fields Ltd 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 Gold Fields i.e., Gold Fields and Ivanhoe Electric go up and down completely randomly.
Pair Corralation between Gold Fields and Ivanhoe Electric
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Ivanhoe Electric. But the stock apears to be less risky and, when comparing its historical volatility, Gold Fields Ltd is 1.02 times less risky than Ivanhoe Electric. The stock trades about -0.2 of its potential returns per unit of risk. The Ivanhoe Electric is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 1,092 in Ivanhoe Electric on August 26, 2024 and sell it today you would lose (133.00) from holding Ivanhoe Electric or give up 12.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Ivanhoe Electric
Performance |
| Timeline |
| Gold Fields |
| Ivanhoe Electric |
Gold Fields and Ivanhoe Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Ivanhoe Electric
The main advantage of trading using opposite Gold Fields and Ivanhoe Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields 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 Gold Fields Ltd 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.| Ivanhoe Electric vs. Labrador Gold Corp | Ivanhoe Electric vs. Aurion Resources | Ivanhoe Electric vs. Puma Exploration | Ivanhoe Electric vs. Golden Star Resource |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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