Correlation Between Ivanhoe Mines and BHP Group
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Mines and BHP Group 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 BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Mines and BHP Group Limited, you can compare the effects of market volatilities on Ivanhoe Mines and BHP Group 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Mines and BHP Group.
Diversification Opportunities for Ivanhoe Mines and BHP Group
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ivanhoe and BHP is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Mines and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Ivanhoe Mines i.e., Ivanhoe Mines and BHP Group go up and down completely randomly.
Pair Corralation between Ivanhoe Mines and BHP Group
Assuming the 90 days horizon Ivanhoe Mines is expected to generate 0.69 times more return on investment than BHP Group. However, Ivanhoe Mines is 1.44 times less risky than BHP Group. It trades about 0.05 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.02 per unit of risk. If you would invest 1,320 in Ivanhoe Mines on September 1, 2024 and sell it today you would earn a total of 30.00 from holding Ivanhoe Mines or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivanhoe Mines vs. BHP Group Limited
Performance |
| Timeline |
| Ivanhoe Mines |
| BHP Group Limited |
Ivanhoe Mines and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Mines and BHP Group
The main advantage of trading using opposite Ivanhoe Mines and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Mines position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| Ivanhoe Mines vs. Fury Gold Mines | Ivanhoe Mines vs. EMX Royalty Corp | Ivanhoe Mines vs. Western Copper and | Ivanhoe Mines vs. Nevada King Gold |
| BHP Group vs. Anglo American PLC | BHP Group vs. Avarone Metals | BHP Group vs. Huntsman Exploration | BHP Group vs. Aurelia Metals Limited |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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