Correlation Between Allied Gold and Ivanhoe Energy

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

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

Diversification Opportunities for Allied Gold and Ivanhoe Energy

0.75

Correlation Coefficient

Allied Gold  Ivanhoe Energy

Poor diversification

The 3 months correlation between Allied and Ivanhoe is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Allied Gold and Ivanhoe Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Energy and Allied Gold 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 Allied Gold 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 Allied Gold i.e., Allied Gold and Ivanhoe Energy go up and down completely randomly.

Pair Corralation between Allied Gold and Ivanhoe Energy

Assuming the 90 days trading horizon Allied Gold is expected to generate 2.04 times less return on investment than Ivanhoe Energy. But when comparing it to its historical volatility, Allied Gold is 1.23 times less risky than Ivanhoe Energy. It trades about 0.21 of its potential returns per unit of risk. Ivanhoe Energy is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  1,244  in Ivanhoe Energy on July 27, 2025 and sell it today you would earn a total of  980.00  from holding Ivanhoe Energy or generate 78.78% return on investment over 90 days.

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

Allied Gold  vs.  Ivanhoe Energy

Allied Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Gold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Allied Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Ivanhoe Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 11 (%) 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.

Pair Trading with Allied Gold and Ivanhoe Energy

The main advantage of trading using opposite Allied Gold and Ivanhoe Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Gold 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 Allied Gold 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.