Correlation Between Ivanhoe Energy and Aris Gold

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

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

Diversification Opportunities for Ivanhoe Energy and Aris Gold

-0.5

Correlation Coefficient

Ivanhoe Energy  Aris Gold

Very good diversification

The 3 months correlation between Ivanhoe and Aris is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Aris Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Gold Corp 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 Aris Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Gold Corp has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Aris Gold go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Aris Gold

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 16.34 times less return on investment than Aris Gold. In addition to that, Ivanhoe Energy is 1.48 times more volatile than Aris Gold Corp. It trades about 0.01 of its total potential returns per unit of risk. Aris Gold Corp is currently generating about 0.18 per unit of volatility. If you would invest  500.00  in Aris Gold Corp on December 21, 2024 and sell it today you would earn a total of  156.00  from holding Aris Gold Corp or generate 31.2% return on investment over 90 days.

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

Ivanhoe Energy  vs.  Aris Gold Corp

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 very healthy basic indicators, Ivanhoe Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Aris Gold Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aris Gold Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aris Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ivanhoe Energy and Aris Gold

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

The idea behind Ivanhoe Energy and Aris Gold Corp 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.