Correlation Between Ivanhoe Mines and Sherritt International
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Mines and Sherritt International 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 Mines and Sherritt International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Mines and Sherritt International, you can compare the effects of market volatilities on Ivanhoe Mines and Sherritt International 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 Mines with a short position of Sherritt International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Mines and Sherritt International.
Diversification Opportunities for Ivanhoe Mines and Sherritt International
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ivanhoe and Sherritt is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Mines and Sherritt International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherritt International and Ivanhoe Mines 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 Mines are associated (or correlated) with Sherritt International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherritt International has no effect on the direction of Ivanhoe Mines i.e., Ivanhoe Mines and Sherritt International go up and down completely randomly.
Pair Corralation between Ivanhoe Mines and Sherritt International
Assuming the 90 days trading horizon Ivanhoe Mines is expected to generate 0.94 times more return on investment than Sherritt International. However, Ivanhoe Mines is 1.06 times less risky than Sherritt International. It trades about 0.01 of its potential returns per unit of risk. Sherritt International is currently generating about -0.2 per unit of risk. If you would invest 1,923 in Ivanhoe Mines on August 27, 2024 and sell it today you would lose (14.00) from holding Ivanhoe Mines or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivanhoe Mines vs. Sherritt International
Performance |
| Timeline |
| Ivanhoe Mines |
| Sherritt International |
Ivanhoe Mines and Sherritt International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Mines and Sherritt International
The main advantage of trading using opposite Ivanhoe Mines and Sherritt International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Mines position performs unexpectedly, Sherritt International 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 Sherritt International will offset losses from the drop in Sherritt International's long position.| Ivanhoe Mines vs. Lundin Mining | Ivanhoe Mines vs. First Quantum Minerals | Ivanhoe Mines vs. HudBay Minerals | Ivanhoe Mines vs. Eldorado Gold Corp |
| Sherritt International vs. HudBay Minerals | Sherritt International vs. Lundin Mining | Sherritt International vs. First Quantum Minerals | Sherritt International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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