Correlation Between Ivanhoe Energy and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and Franco Nevada 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 Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Energy and Franco Nevada, you can compare the effects of market volatilities on Ivanhoe Energy and Franco Nevada 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 Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Franco Nevada.
Diversification Opportunities for Ivanhoe Energy and Franco Nevada
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ivanhoe and Franco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada 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 Franco Nevada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franco Nevada has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Franco Nevada go up and down completely randomly.
Pair Corralation between Ivanhoe Energy and Franco Nevada
Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Franco Nevada. In addition to that, Ivanhoe Energy is 1.26 times more volatile than Franco Nevada. It trades about -0.26 of its total potential returns per unit of risk. Franco Nevada is currently generating about -0.24 per unit of volatility. If you would invest 18,895 in Franco Nevada on August 28, 2024 and sell it today you would lose (2,011) from holding Franco Nevada or give up 10.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivanhoe Energy vs. Franco Nevada
Performance |
| Timeline |
| Ivanhoe Energy |
| Franco Nevada |
Ivanhoe Energy and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Energy and Franco Nevada
The main advantage of trading using opposite Ivanhoe Energy and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, Franco Nevada 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 Franco Nevada will offset losses from the drop in Franco Nevada's long position.| Ivanhoe Energy vs. Questerre Energy | Ivanhoe Energy vs. Ivanhoe Mines | Ivanhoe Energy vs. Eastern Platinum Limited | Ivanhoe Energy vs. iShares Canadian HYBrid |
| Franco Nevada vs. Wheaton Precious Metals | Franco Nevada vs. Agnico Eagle Mines | Franco Nevada vs. Alamos Gold | Franco Nevada vs. Osisko Gold Ro |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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