Correlation Between Ivanhoe Energy and Canaf Investments

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

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

Diversification Opportunities for Ivanhoe Energy and Canaf Investments

0.72

Correlation Coefficient

Ivanhoe Energy  Canaf Investments

Poor diversification

The 3 months correlation between Ivanhoe and Canaf is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments 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 Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Canaf Investments go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Canaf Investments

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 0.95 times more return on investment than Canaf Investments. However, Ivanhoe Energy is 1.05 times less risky than Canaf Investments. It trades about 0.18 of its potential returns per unit of risk. Canaf Investments is currently generating about 0.02 per unit of risk. If you would invest  866.00  in Ivanhoe Energy on September 5, 2024 and sell it today you would earn a total of  411.00  from holding Ivanhoe Energy or generate 47.46% 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.  Canaf Investments

Ivanhoe Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 13 (%) 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.

Canaf Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canaf Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Canaf Investments is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ivanhoe Energy and Canaf Investments

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

The idea behind Ivanhoe Energy and Canaf Investments 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.