Correlation Between Ivanhoe Energy and Red Pine

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

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

Diversification Opportunities for Ivanhoe Energy and Red Pine

0.57

Correlation Coefficient

Ivanhoe Energy  Red Pine

Very weak diversification

The 3 months correlation between Ivanhoe and Red is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Red Pine Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Pine Exploration 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 Red Pine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Pine Exploration has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Red Pine go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Red Pine

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 0.67 times more return on investment than Red Pine. However, Ivanhoe Energy is 1.49 times less risky than Red Pine. It trades about 0.16 of its potential returns per unit of risk. Red Pine Exploration is currently generating about 0.1 per unit of risk. If you would invest  866.00  in Ivanhoe Energy on September 5, 2024 and sell it today you would earn a total of  369.00  from holding Ivanhoe Energy or generate 42.61% return on investment over 90 days.

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

Ivanhoe Energy  vs.  Red Pine Exploration

Ivanhoe Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 12 (%) 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.

Red Pine Exploration

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Red Pine Exploration are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Red Pine showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ivanhoe Energy and Red Pine

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

The idea behind Ivanhoe Energy and Red Pine Exploration 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .