Correlation Between Ivanhoe Energy and Pacific Booker

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

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

Diversification Opportunities for Ivanhoe Energy and Pacific Booker

0.86

Correlation Coefficient

Ivanhoe Energy  Pacific Booker

Very poor diversification

The 3 months correlation between Ivanhoe and Pacific is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Pacific Booker Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Booker 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 Pacific Booker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Booker Minerals has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Pacific Booker go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Pacific Booker

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 0.55 times more return on investment than Pacific Booker. However, Ivanhoe Energy is 1.81 times less risky than Pacific Booker. It trades about -0.21 of its potential returns per unit of risk. Pacific Booker Minerals is currently generating about -0.23 per unit of risk. If you would invest  1,305  in Ivanhoe Energy on September 17, 2024 and sell it today you would lose (204.00) from holding Ivanhoe Energy or give up 15.63% of portfolio value over 90 days.

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

Ivanhoe Energy  vs.  Pacific Booker Minerals

Ivanhoe Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ivanhoe Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pacific Booker Minerals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Booker Minerals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Pacific Booker showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ivanhoe Energy and Pacific Booker

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

The idea behind Ivanhoe Energy and Pacific Booker 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.