Correlation Between Ivanhoe Energy and Wheaton Precious

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

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

Diversification Opportunities for Ivanhoe Energy and Wheaton Precious

0.73

Correlation Coefficient

Ivanhoe Energy  Wheaton Precious

Poor diversification

The 3 months correlation between Ivanhoe and Wheaton is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Wheaton Precious go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Wheaton Precious

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 2.09 times more return on investment than Wheaton Precious. However, Ivanhoe Energy is 2.09 times more volatile than Wheaton Precious Metals. It trades about 0.18 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.07 per unit of risk. If you would invest  892.00  in Ivanhoe Energy on August 31, 2024 and sell it today you would earn a total of  438.00  from holding Ivanhoe Energy or generate 49.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Ivanhoe Energy  vs.  Wheaton Precious Metals

Ivanhoe Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 14 (%) 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.

Wheaton Precious Metals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Wheaton Precious may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ivanhoe Energy and Wheaton Precious

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

The idea behind Ivanhoe Energy and Wheaton Precious 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.