Correlation Between Ivanhoe Energy and Fredonia Mining
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and Fredonia Mining 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 Fredonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Energy and Fredonia Mining, you can compare the effects of market volatilities on Ivanhoe Energy and Fredonia Mining 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 Fredonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Fredonia Mining.
Diversification Opportunities for Ivanhoe Energy and Fredonia Mining
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ivanhoe and Fredonia is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Fredonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fredonia Mining 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 Fredonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fredonia Mining has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Fredonia Mining go up and down completely randomly.
Pair Corralation between Ivanhoe Energy and Fredonia Mining
Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Fredonia Mining. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 2.71 times less risky than Fredonia Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Fredonia Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Fredonia Mining on December 10, 2024 and sell it today you would lose (29.00) from holding Fredonia Mining or give up 60.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivanhoe Energy vs. Fredonia Mining
Performance |
| Timeline |
| Ivanhoe Energy |
| Fredonia Mining |
Ivanhoe Energy and Fredonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Energy and Fredonia Mining
The main advantage of trading using opposite Ivanhoe Energy and Fredonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, Fredonia Mining 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 Fredonia Mining will offset losses from the drop in Fredonia Mining's long position.| Ivanhoe Energy vs. Questerre Energy | Ivanhoe Energy vs. Ivanhoe Mines | Ivanhoe Energy vs. Eastern Platinum Limited |
| Fredonia Mining vs. CNJ Capital Investments | Fredonia Mining vs. Economic Investment Trust | Fredonia Mining vs. Canadian General Investments | Fredonia Mining vs. Bird Construction |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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