Correlation Between Ivanhoe Energy and Bitterroot Resources
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and Bitterroot Resources 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 Bitterroot Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Energy and Bitterroot Resources, you can compare the effects of market volatilities on Ivanhoe Energy and Bitterroot Resources 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 Bitterroot Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Bitterroot Resources.
Diversification Opportunities for Ivanhoe Energy and Bitterroot Resources
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ivanhoe and Bitterroot is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Bitterroot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitterroot Resources 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 Bitterroot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitterroot Resources has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Bitterroot Resources go up and down completely randomly.
Pair Corralation between Ivanhoe Energy and Bitterroot Resources
Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Bitterroot Resources. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 2.96 times less risky than Bitterroot Resources. The stock trades about -0.2 of its potential returns per unit of risk. The Bitterroot Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Bitterroot Resources on September 5, 2024 and sell it today you would earn a total of 1.00 from holding Bitterroot Resources or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ivanhoe Energy vs. Bitterroot Resources
Performance |
| Timeline |
| Ivanhoe Energy |
| Bitterroot Resources |
Ivanhoe Energy and Bitterroot Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Energy and Bitterroot Resources
The main advantage of trading using opposite Ivanhoe Energy and Bitterroot Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, Bitterroot Resources 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 Bitterroot Resources will offset losses from the drop in Bitterroot Resources' long position.| Ivanhoe Energy vs. Questerre Energy | Ivanhoe Energy vs. Ivanhoe Mines | Ivanhoe Energy vs. Eastern Platinum Limited |
| Bitterroot Resources vs. First Majestic Silver | Bitterroot Resources vs. Ivanhoe Energy | Bitterroot Resources vs. Orezone Gold Corp | Bitterroot Resources vs. Faraday Copper Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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