Correlation Between Rubicon Organics and Ivanhoe Energy

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

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

Diversification Opportunities for Rubicon Organics and Ivanhoe Energy

-0.51

Correlation Coefficient

Rubicon Organics  Ivanhoe Energy

Excellent diversification

The 3 months correlation between Rubicon and Ivanhoe is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and Ivanhoe Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Energy and Rubicon Organics 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 Rubicon Organics are associated (or correlated) with Ivanhoe Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Energy has no effect on the direction of Rubicon Organics i.e., Rubicon Organics and Ivanhoe Energy go up and down completely randomly.

Pair Corralation between Rubicon Organics and Ivanhoe Energy

Assuming the 90 days trading horizon Rubicon Organics is expected to generate 1.47 times more return on investment than Ivanhoe Energy. However, Rubicon Organics is 1.47 times more volatile than Ivanhoe Energy. It trades about 0.03 of its potential returns per unit of risk. Ivanhoe Energy is currently generating about -0.14 per unit of risk. If you would invest  39.00  in Rubicon Organics on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Rubicon Organics or generate 0.0% return on investment over 90 days.

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

Rubicon Organics  vs.  Ivanhoe Energy

Rubicon Organics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Rubicon Organics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Rubicon Organics and Ivanhoe Energy

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

The idea behind Rubicon Organics and Ivanhoe Energy 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.