Correlation Between Ivanhoe Energy and Big Ridge

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

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

Diversification Opportunities for Ivanhoe Energy and Big Ridge

0.77

Correlation Coefficient

Ivanhoe Energy  Big Ridge

Poor diversification

The 3 months correlation between Ivanhoe and Big is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold 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 Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Big Ridge go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Big Ridge

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Big Ridge. In addition to that, Ivanhoe Energy is 1.72 times more volatile than Big Ridge Gold. It trades about -0.19 of its total potential returns per unit of risk. Big Ridge Gold is currently generating about -0.22 per unit of volatility. If you would invest  10.00  in Big Ridge Gold on September 30, 2024 and sell it today you would lose (1.00) from holding Big Ridge Gold or give up 10.0% of portfolio value over 90 days.

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

Ivanhoe Energy  vs.  Big Ridge Gold

Ivanhoe Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Big Ridge Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Big Ridge Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Big Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ivanhoe Energy and Big Ridge

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

The idea behind Ivanhoe Energy and Big Ridge Gold 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.