Correlation Between Ivanhoe Energy and Pure Energy

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

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

Diversification Opportunities for Ivanhoe Energy and Pure Energy

0.35

Correlation Coefficient

Ivanhoe Energy  Pure Energy

Weak diversification

The 3 months correlation between Ivanhoe and Pure is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Pure Energy Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Energy Minerals 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 Pure Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Energy Minerals has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Pure Energy go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Pure Energy

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 0.63 times more return on investment than Pure Energy. However, Ivanhoe Energy is 1.58 times less risky than Pure Energy. It trades about 0.08 of its potential returns per unit of risk. Pure Energy Minerals is currently generating about 0.05 per unit of risk. If you would invest  1,033  in Ivanhoe Energy on September 12, 2024 and sell it today you would earn a total of  161.00  from holding Ivanhoe Energy or generate 15.59% 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.  Pure Energy Minerals

Ivanhoe Energy

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 6 (%) 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.

Pure Energy Minerals

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Energy Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pure Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ivanhoe Energy and Pure Energy

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

The idea behind Ivanhoe Energy and Pure Energy Minerals 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.