Correlation Between Ivanhoe Energy and Tectonic Metals

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

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

Diversification Opportunities for Ivanhoe Energy and Tectonic Metals

0.65

Correlation Coefficient

Ivanhoe Energy  Tectonic Metals

Poor diversification

The 3 months correlation between Ivanhoe and Tectonic is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Tectonic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic 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 Tectonic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Metals has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Tectonic Metals go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Tectonic Metals

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Tectonic Metals. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 1.61 times less risky than Tectonic Metals. The stock trades about -0.22 of its potential returns per unit of risk. The Tectonic Metals is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Tectonic Metals on October 12, 2024 and sell it today you would earn a total of  1.00  from holding Tectonic Metals or generate 25.0% return on investment over 90 days.

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

Ivanhoe Energy  vs.  Tectonic Metals

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 unfluctuating 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.

Tectonic Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ivanhoe Energy and Tectonic Metals

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

The idea behind Ivanhoe Energy and Tectonic 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.