Correlation Between Major Drilling and Ivanhoe Mines
Can any of the company-specific risk be diversified away by investing in both Major Drilling and Ivanhoe Mines 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 Major Drilling and Ivanhoe Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Ivanhoe Mines, you can compare the effects of market volatilities on Major Drilling and Ivanhoe Mines 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 Major Drilling with a short position of Ivanhoe Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Ivanhoe Mines.
Diversification Opportunities for Major Drilling and Ivanhoe Mines
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Major and Ivanhoe is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines and Major Drilling 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 Major Drilling Group are associated (or correlated) with Ivanhoe Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Mines has no effect on the direction of Major Drilling i.e., Major Drilling and Ivanhoe Mines go up and down completely randomly.
Pair Corralation between Major Drilling and Ivanhoe Mines
Assuming the 90 days trading horizon Major Drilling Group is expected to under-perform the Ivanhoe Mines. But the stock apears to be less risky and, when comparing its historical volatility, Major Drilling Group is 1.27 times less risky than Ivanhoe Mines. The stock trades about -0.01 of its potential returns per unit of risk. The Ivanhoe Mines is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,113 in Ivanhoe Mines on December 6, 2024 and sell it today you would earn a total of 310.00 from holding Ivanhoe Mines or generate 27.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Major Drilling Group vs. Ivanhoe Mines
Performance |
| Timeline |
| Major Drilling Group |
| Ivanhoe Mines |
Major Drilling and Ivanhoe Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Ivanhoe Mines
The main advantage of trading using opposite Major Drilling and Ivanhoe Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, Ivanhoe Mines 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 Ivanhoe Mines will offset losses from the drop in Ivanhoe Mines' long position.| Major Drilling vs. Pason Systems | Major Drilling vs. HudBay Minerals | Major Drilling vs. Ensign Energy Services | Major Drilling vs. Precision Drilling |
| Ivanhoe Mines vs. Lundin Mining | Ivanhoe Mines vs. First Quantum Minerals | Ivanhoe Mines vs. HudBay Minerals | Ivanhoe Mines vs. Eldorado Gold Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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