Correlation Between Ivanhoe Energy and American Creek

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

By analyzing existing cross correlation between Ivanhoe Energy and American Creek Resources, you can compare the effects of market volatilities on Ivanhoe Energy and American Creek 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 American Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and American Creek.

Diversification Opportunities for Ivanhoe Energy and American Creek

0.56

Correlation Coefficient

Ivanhoe Energy  American Creek

Very weak diversification

The 3 months correlation between Ivanhoe and American is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and American Creek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Creek Resources 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 American Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Creek Resources has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and American Creek go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and American Creek

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 0.59 times more return on investment than American Creek. However, Ivanhoe Energy is 1.71 times less risky than American Creek. It trades about -0.06 of its potential returns per unit of risk. American Creek Resources is currently generating about -0.21 per unit of risk. If you would invest  1,100  in Ivanhoe Energy on December 30, 2024 and sell it today you would lose (193.00) from holding Ivanhoe Energy or give up 17.55% of portfolio value over 90 days.

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

Ivanhoe Energy  vs.  American Creek Resources

Ivanhoe Energy

Risk-Adjusted Performance

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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

American Creek Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Creek Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 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 American Creek

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

The idea behind Ivanhoe Energy and American Creek 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.