Correlation Between Ivanhoe Energy and Standard Lithium

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

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

Diversification Opportunities for Ivanhoe Energy and Standard Lithium

0.48

Correlation Coefficient

Ivanhoe Energy  Standard Lithium

Very weak diversification

The 3 months correlation between Ivanhoe and Standard is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium 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 Standard Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Lithium has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Standard Lithium go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Standard Lithium

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Standard Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 1.31 times less risky than Standard Lithium. The stock trades about -0.06 of its potential returns per unit of risk. The Standard Lithium is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  215.00  in Standard Lithium on December 30, 2024 and sell it today you would lose (30.00) from holding Standard Lithium or give up 13.95% of portfolio value over 90 days.

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

Ivanhoe Energy  vs.  Standard Lithium

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.

Standard Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Standard Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Ivanhoe Energy and Standard Lithium

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

The idea behind Ivanhoe Energy and Standard Lithium 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.