Correlation Between Generation Mining and Ivanhoe Energy

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Can any of the company-specific risk be diversified away by investing in both Generation Mining and Ivanhoe Energy 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 Generation Mining and Ivanhoe Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Generation Mining and Ivanhoe Energy, you can compare the effects of market volatilities on Generation Mining and Ivanhoe Energy 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 Generation Mining with a short position of Ivanhoe Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Mining and Ivanhoe Energy.

Diversification Opportunities for Generation Mining and Ivanhoe Energy

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Generation and Ivanhoe is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Generation Mining and Ivanhoe Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Energy and Generation Mining 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 Generation Mining are associated (or correlated) with Ivanhoe Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Energy has no effect on the direction of Generation Mining i.e., Generation Mining and Ivanhoe Energy go up and down completely randomly.

Pair Corralation between Generation Mining and Ivanhoe Energy

Assuming the 90 days trading horizon Generation Mining is expected to generate 2.27 times less return on investment than Ivanhoe Energy. But when comparing it to its historical volatility, Generation Mining is 1.34 times less risky than Ivanhoe Energy. It trades about 0.15 of its potential returns per unit of risk. Ivanhoe Energy is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,323  in Ivanhoe Energy on April 16, 2024 and sell it today you would earn a total of  247.00  from holding Ivanhoe Energy or generate 18.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Generation Mining  vs.  Ivanhoe Energy

 Performance 
       Timeline  
Generation Mining 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Generation Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Generation Mining displayed solid returns over the last few months and may actually be approaching a breakup point.
Ivanhoe Energy 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ivanhoe Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Generation Mining and Ivanhoe Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Generation Mining and Ivanhoe Energy

The main advantage of trading using opposite Generation Mining and Ivanhoe Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generation Mining position performs unexpectedly, Ivanhoe Energy 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 Energy will offset losses from the drop in Ivanhoe Energy's long position.
The idea behind Generation Mining and Ivanhoe Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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