Correlation Between Ivanhoe Energy and Transcontinental

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

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

Diversification Opportunities for Ivanhoe Energy and Transcontinental

-0.44

Correlation Coefficient

Ivanhoe Energy  Transcontinental

Very good diversification

The 3 months correlation between Ivanhoe and Transcontinental is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Transcontinental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental 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 Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Transcontinental go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Transcontinental

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Transcontinental. In addition to that, Ivanhoe Energy is 1.02 times more volatile than Transcontinental. It trades about -0.01 of its total potential returns per unit of risk. Transcontinental is currently generating about 0.04 per unit of volatility. If you would invest  1,351  in Transcontinental on October 25, 2024 and sell it today you would earn a total of  499.00  from holding Transcontinental or generate 36.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.56%
Values	Daily Returns

Ivanhoe Energy  vs.  Transcontinental

Ivanhoe Energy

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Transcontinental

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transcontinental are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Transcontinental is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ivanhoe Energy and Transcontinental

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

The idea behind Ivanhoe Energy and Transcontinental 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..