Correlation Between Ivanhoe Energy and Copper Road

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

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

Diversification Opportunities for Ivanhoe Energy and Copper Road

0.76

Correlation Coefficient

Ivanhoe Energy  Copper Road

Poor diversification

The 3 months correlation between Ivanhoe and Copper is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Copper Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Road 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 Copper Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Road Resources has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Copper Road go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Copper Road

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Copper Road. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 3.86 times less risky than Copper Road. The stock trades about -0.02 of its potential returns per unit of risk. The Copper Road Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7.50  in Copper Road Resources on October 22, 2024 and sell it today you would lose (6.00) from holding Copper Road Resources or give up 80.0% 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.  Copper Road Resources

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.

Copper Road Resources

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Copper Road Resources 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 Copper Road

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

The idea behind Ivanhoe Energy and Copper Road 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.