Correlation Between Ivanhoe Energy and First Quantum
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and First Quantum 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 Quantum 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 Quantum Minerals, you can compare the effects of market volatilities on Ivanhoe Energy and First Quantum 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 Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and First Quantum.
Diversification Opportunities for Ivanhoe Energy and First Quantum
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ivanhoe and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals 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 Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and First Quantum go up and down completely randomly.
Pair Corralation between Ivanhoe Energy and First Quantum
Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the First Quantum. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 1.12 times less risky than First Quantum. The stock trades about -0.11 of its potential returns per unit of risk. The First Quantum Minerals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,851 in First Quantum Minerals on August 25, 2024 and sell it today you would earn a total of 77.00 from holding First Quantum Minerals or generate 4.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivanhoe Energy vs. First Quantum Minerals
Performance |
| Timeline |
| Ivanhoe Energy |
| First Quantum Minerals |
Ivanhoe Energy and First Quantum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Energy and First Quantum
The main advantage of trading using opposite Ivanhoe Energy and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, First Quantum 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 Quantum will offset losses from the drop in First Quantum'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 Quantum vs. Lundin Mining | First Quantum vs. HudBay Minerals | First Quantum vs. Teck Resources Limited | First Quantum vs. Ivanhoe Mines |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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