Correlation Between Ivanhoe Energy and Sun Peak

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

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

Diversification Opportunities for Ivanhoe Energy and Sun Peak

-0.04

Correlation Coefficient

Ivanhoe Energy  Sun Peak

Good diversification

The 3 months correlation between Ivanhoe and Sun is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals 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 Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Sun Peak go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Sun Peak

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Sun Peak. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 1.35 times less risky than Sun Peak. The stock trades about -0.04 of its potential returns per unit of risk. The Sun Peak Metals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Sun Peak Metals on December 21, 2024 and sell it today you would lose (2.00) from holding Sun Peak Metals or give up 6.67% of portfolio value over 90 days.

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

Ivanhoe Energy  vs.  Sun Peak Metals

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Sun Peak Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sun Peak is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ivanhoe Energy and Sun Peak

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

The idea behind Ivanhoe Energy and Sun Peak Metals 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.