Correlation Between PureCycle Technologies and Ivanhoe Mines

Can any of the company-specific risk be diversified away by investing in both PureCycle Technologies 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 PureCycle Technologies and Ivanhoe Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PureCycle Technologies and Ivanhoe Mines, you can compare the effects of market volatilities on PureCycle Technologies 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 PureCycle Technologies with a short position of Ivanhoe Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureCycle Technologies and Ivanhoe Mines.

Diversification Opportunities for PureCycle Technologies and Ivanhoe Mines

0.08

Correlation Coefficient

PureCycle Technologies  Ivanhoe Mines

Significant diversification

The 3 months correlation between PureCycle and Ivanhoe is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding PureCycle Technologies and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines and PureCycle Technologies 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 PureCycle Technologies 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 PureCycle Technologies i.e., PureCycle Technologies and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between PureCycle Technologies and Ivanhoe Mines

Assuming the 90 days horizon PureCycle Technologies is expected to generate 419.33 times less return on investment than Ivanhoe Mines. In addition to that, PureCycle Technologies is 2.31 times more volatile than Ivanhoe Mines. It trades about 0.0 of its total potential returns per unit of risk. Ivanhoe Mines is currently generating about 0.06 per unit of volatility. If you would invest  1,320  in Ivanhoe Mines on September 12, 2024 and sell it today you would earn a total of  30.00  from holding Ivanhoe Mines or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PureCycle Technologies  vs.  Ivanhoe Mines

PureCycle Technologies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PureCycle Technologies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, PureCycle Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Ivanhoe Mines

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Mines are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Ivanhoe Mines may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PureCycle Technologies and Ivanhoe Mines

The main advantage of trading using opposite PureCycle Technologies and Ivanhoe Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureCycle Technologies 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 PureCycle Technologies 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.