Correlation Between Ivanhoe Mines and South32
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Mines and South32 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 South32 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Mines and South32 Limited, you can compare the effects of market volatilities on Ivanhoe Mines and South32 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 South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Mines and South32.
Diversification Opportunities for Ivanhoe Mines and South32
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ivanhoe and South32 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Mines and South32 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 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 South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 Limited has no effect on the direction of Ivanhoe Mines i.e., Ivanhoe Mines and South32 go up and down completely randomly.
Pair Corralation between Ivanhoe Mines and South32
Assuming the 90 days horizon Ivanhoe Mines is expected to generate 1.41 times more return on investment than South32. However, Ivanhoe Mines is 1.41 times more volatile than South32 Limited. It trades about 0.03 of its potential returns per unit of risk. South32 Limited is currently generating about -0.1 per unit of risk. If you would invest 1,343 in Ivanhoe Mines on September 2, 2024 and sell it today you would earn a total of 16.00 from holding Ivanhoe Mines or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivanhoe Mines vs. South32 Limited
Performance |
| Timeline |
| Ivanhoe Mines |
| South32 Limited |
Ivanhoe Mines and South32 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Mines and South32
The main advantage of trading using opposite Ivanhoe Mines and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Mines position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32's long position.| Ivanhoe Mines vs. South32 Limited | Ivanhoe Mines vs. NioCorp Developments Ltd | Ivanhoe Mines vs. HUMANA INC | Ivanhoe Mines vs. SCOR PK |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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