Correlation Between Ivanhoe Energy and Archon Minerals

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

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

Diversification Opportunities for Ivanhoe Energy and Archon Minerals

0.29

Correlation Coefficient

Ivanhoe Energy  Archon Minerals

Modest diversification

The 3 months correlation between Ivanhoe and Archon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Archon Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archon Minerals and Ivanhoe Energy 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 Ivanhoe Energy are associated (or correlated) with Archon Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archon Minerals has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Archon Minerals go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Archon Minerals

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Archon Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 1.84 times less risky than Archon Minerals. The stock trades about -0.25 of its potential returns per unit of risk. The Archon Minerals is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Archon Minerals on October 10, 2024 and sell it today you would lose (6.00) from holding Archon Minerals or give up 37.5% of portfolio value over 90 days.

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

Ivanhoe Energy  vs.  Archon Minerals

Ivanhoe Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivanhoe Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Archon Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archon Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ivanhoe Energy and Archon Minerals

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

The idea behind Ivanhoe Energy and Archon Minerals 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.