Correlation Between Ivanhoe Energy and Equinox Gold

Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and Equinox 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 Equinox 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 Equinox Gold Corp, you can compare the effects of market volatilities on Ivanhoe Energy and Equinox 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 Equinox Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Equinox Gold.

Diversification Opportunities for Ivanhoe Energy and Equinox Gold

-0.03

Correlation Coefficient

Ivanhoe Energy  Equinox Gold

Good diversification

The 3 months correlation between Ivanhoe and Equinox is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Equinox Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinox 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 Equinox Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinox Gold Corp has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Equinox Gold go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Equinox Gold

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 1.17 times more return on investment than Equinox Gold. However, Ivanhoe Energy is 1.17 times more volatile than Equinox Gold Corp. It trades about 0.18 of its potential returns per unit of risk. Equinox Gold Corp is currently generating about 0.06 per unit of risk. If you would invest  892.00  in Ivanhoe Energy on September 3, 2024 and sell it today you would earn a total of  438.00  from holding Ivanhoe Energy or generate 49.1% return on investment over 90 days.

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

Ivanhoe Energy  vs.  Equinox Gold Corp

Ivanhoe Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 14 (%) 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.

Equinox Gold Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equinox Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Equinox Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ivanhoe Energy and Equinox Gold

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

The idea behind Ivanhoe Energy and Equinox 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.