Correlation Between Noram Lithium and Ivanhoe Mines
Can any of the company-specific risk be diversified away by investing in both Noram Lithium 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 Noram Lithium and Ivanhoe Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noram Lithium Corp and Ivanhoe Mines, you can compare the effects of market volatilities on Noram Lithium 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 Noram Lithium with a short position of Ivanhoe Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noram Lithium and Ivanhoe Mines.
Diversification Opportunities for Noram Lithium and Ivanhoe Mines
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Noram and Ivanhoe is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Noram Lithium Corp and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines and Noram Lithium 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 Noram Lithium Corp 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 Noram Lithium i.e., Noram Lithium and Ivanhoe Mines go up and down completely randomly.
Pair Corralation between Noram Lithium and Ivanhoe Mines
Assuming the 90 days horizon Noram Lithium Corp is expected to under-perform the Ivanhoe Mines. In addition to that, Noram Lithium is 1.32 times more volatile than Ivanhoe Mines. It trades about -0.07 of its total potential returns per unit of risk. Ivanhoe Mines is currently generating about 0.03 per unit of volatility. If you would invest 1,862 in Ivanhoe Mines on September 3, 2024 and sell it today you would earn a total of 23.00 from holding Ivanhoe Mines or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Noram Lithium Corp vs. Ivanhoe Mines
Performance |
| Timeline |
| Noram Lithium Corp |
| Ivanhoe Mines |
Noram Lithium and Ivanhoe Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noram Lithium and Ivanhoe Mines
The main advantage of trading using opposite Noram Lithium and Ivanhoe Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noram Lithium 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.| Noram Lithium vs. Algoma Steel Group | Noram Lithium vs. Champion Iron | Noram Lithium vs. International Zeolite Corp | Noram Lithium vs. European Residential Real |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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