Correlation Between Ivanhoe Electric and CarsalesCom

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

By analyzing existing cross correlation between Ivanhoe Electric and CarsalesCom Ltd ADR, you can compare the effects of market volatilities on Ivanhoe Electric and CarsalesCom 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 Electric with a short position of CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Electric and CarsalesCom.

Diversification Opportunities for Ivanhoe Electric and CarsalesCom

-0.04

Correlation Coefficient

Ivanhoe Electric  CarsalesCom

Good diversification

The 3 months correlation between Ivanhoe and CarsalesCom is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Electric and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR and Ivanhoe Electric 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 Electric are associated (or correlated) with CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of Ivanhoe Electric i.e., Ivanhoe Electric and CarsalesCom go up and down completely randomly.

Pair Corralation between Ivanhoe Electric and CarsalesCom

Allowing for the 90-day total investment horizon Ivanhoe Electric is expected to under-perform the CarsalesCom. In addition to that, Ivanhoe Electric is 1.25 times more volatile than CarsalesCom Ltd ADR. It trades about -0.24 of its total potential returns per unit of risk. CarsalesCom Ltd ADR is currently generating about -0.23 per unit of volatility. If you would invest  5,407  in CarsalesCom Ltd ADR on October 9, 2024 and sell it today you would lose (857.00) from holding CarsalesCom Ltd ADR or give up 15.85% of portfolio value over 90 days.

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

Ivanhoe Electric  vs.  CarsalesCom Ltd ADR

Ivanhoe Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivanhoe Electric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CarsalesCom ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CarsalesCom Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CarsalesCom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ivanhoe Electric and CarsalesCom

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

The idea behind Ivanhoe Electric and CarsalesCom Ltd ADR 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.