Correlation Between Ivanhoe Energy and Geodrill

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

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

Diversification Opportunities for Ivanhoe Energy and Geodrill

0.01

Correlation Coefficient

Ivanhoe Energy  Geodrill

Significant diversification

The 3 months correlation between Ivanhoe and Geodrill is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Geodrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geodrill Limited 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 Geodrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geodrill Limited has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Geodrill go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Geodrill

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Geodrill. In addition to that, Ivanhoe Energy is 2.09 times more volatile than Geodrill Limited. It trades about -0.06 of its total potential returns per unit of risk. Geodrill Limited is currently generating about -0.02 per unit of volatility. If you would invest  301.00  in Geodrill Limited on December 30, 2024 and sell it today you would lose (10.00) from holding Geodrill Limited or give up 3.32% of portfolio value over 90 days.

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

Ivanhoe Energy  vs.  Geodrill Limited

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Geodrill Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geodrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Geodrill is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ivanhoe Energy and Geodrill

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

The idea behind Ivanhoe Energy and Geodrill Limited 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.