Correlation Between Niocorp Developments and Ivanhoe Mines

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

Diversification Opportunities for Niocorp Developments and Ivanhoe Mines

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Niocorp and Ivanhoe is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Niocorp Developments and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines and Niocorp Developments 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 Niocorp Developments 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 Niocorp Developments i.e., Niocorp Developments and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between Niocorp Developments and Ivanhoe Mines

Assuming the 90 days horizon Niocorp Developments is expected to under-perform the Ivanhoe Mines. In addition to that, Niocorp Developments is 1.98 times more volatile than Ivanhoe Mines. It trades about -0.04 of its total potential returns per unit of risk. Ivanhoe Mines is currently generating about 0.14 per unit of volatility. If you would invest  1,117  in Ivanhoe Mines on December 29, 2023 and sell it today you would earn a total of  459.00  from holding Ivanhoe Mines or generate 41.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Niocorp Developments  vs.  Ivanhoe Mines

 Performance 
       Timeline  
Niocorp Developments 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Niocorp Developments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Ivanhoe Mines 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Mines are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ivanhoe Mines displayed solid returns over the last few months and may actually be approaching a breakup point.

Niocorp Developments and Ivanhoe Mines Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Niocorp Developments and Ivanhoe Mines

The main advantage of trading using opposite Niocorp Developments and Ivanhoe Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Niocorp Developments 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.
The idea behind Niocorp Developments and Ivanhoe Mines 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.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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