Correlation Between Contango ORE and Irving Resources

Can any of the company-specific risk be diversified away by investing in both Contango ORE and Irving Resources 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 Contango ORE and Irving Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Contango ORE and Irving Resources

-0.35

Correlation Coefficient

Contango ORE  Irving Resources

Very good diversification

The 3 months correlation between Contango and Irving is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE and Irving Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Irving Resources and Contango ORE 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 Contango ORE are associated (or correlated) with Irving Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Irving Resources has no effect on the direction of Contango ORE i.e., Contango ORE and Irving Resources go up and down completely randomly.

Pair Corralation between Contango ORE and Irving Resources

Given the investment horizon of 90 days Contango ORE is expected to generate 0.66 times more return on investment than Irving Resources. However, Contango ORE is 1.51 times less risky than Irving Resources. It trades about 0.13 of its potential returns per unit of risk. Irving Resources is currently generating about -0.01 per unit of risk. If you would invest  1,040  in Contango ORE on February 7, 2025 and sell it today you would earn a total of  358.00  from holding Contango ORE or generate 34.42% return on investment over 90 days.

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

Contango ORE  vs.  Irving Resources

Contango ORE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Contango ORE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Contango ORE displayed solid returns over the last few months and may actually be approaching a breakup point.

Irving Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Irving Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Irving Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Contango ORE and Irving Resources

The main advantage of trading using opposite Contango ORE and Irving Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contango ORE position performs unexpectedly, Irving Resources 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 Irving Resources will offset losses from the drop in Irving Resources' long position.

The idea behind Contango ORE and Irving Resources 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.