Correlation Between Ivanhoe Energy and First Majestic
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and First Majestic 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 Ivanhoe Energy and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Energy and First Majestic Silver, you can compare the effects of market volatilities on Ivanhoe Energy and First Majestic 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 Ivanhoe Energy with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and First Majestic.
Diversification Opportunities for Ivanhoe Energy and First Majestic
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ivanhoe and First is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Ivanhoe Energy 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 Ivanhoe Energy are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and First Majestic go up and down completely randomly.
Pair Corralation between Ivanhoe Energy and First Majestic
Assuming the 90 days horizon Ivanhoe Energy is expected to generate 0.92 times more return on investment than First Majestic. However, Ivanhoe Energy is 1.09 times less risky than First Majestic. It trades about -0.24 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.3 per unit of risk. If you would invest 1,552 in Ivanhoe Energy on August 27, 2024 and sell it today you would lose (202.00) from holding Ivanhoe Energy or give up 13.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivanhoe Energy vs. First Majestic Silver
Performance |
| Timeline |
| Ivanhoe Energy |
| First Majestic Silver |
Ivanhoe Energy and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Energy and First Majestic
The main advantage of trading using opposite Ivanhoe Energy and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| Ivanhoe Energy vs. Questerre Energy | Ivanhoe Energy vs. Ivanhoe Mines | Ivanhoe Energy vs. Eastern Platinum Limited | Ivanhoe Energy vs. iShares Canadian HYBrid |
| First Majestic vs. Quisitive Technology Solutions | First Majestic vs. Canso Select Opportunities | First Majestic vs. Canadian General Investments | First Majestic vs. Sparx Technology |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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