Correlation Between Ivanhoe Energy and Northern Shield

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

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

Diversification Opportunities for Ivanhoe Energy and Northern Shield

0.36

Correlation Coefficient

Ivanhoe Energy  Northern Shield

Weak diversification

The 3 months correlation between Ivanhoe and Northern is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Northern Shield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Shield 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 Northern Shield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Shield Resources has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Northern Shield go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Northern Shield

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Northern Shield. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 1.78 times less risky than Northern Shield. The stock trades about -0.06 of its potential returns per unit of risk. The Northern Shield Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Northern Shield Resources on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Northern Shield Resources or generate 0.0% return on investment over 90 days.

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

Ivanhoe Energy  vs.  Northern Shield Resources

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.

Northern Shield Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Shield Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Northern Shield showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ivanhoe Energy and Northern Shield

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

The idea behind Ivanhoe Energy and Northern Shield 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.