Correlation Between Ivanhoe Energy and Kingsmen Resources
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and Kingsmen 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 Kingsmen 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 Kingsmen Resources, you can compare the effects of market volatilities on Ivanhoe Energy and Kingsmen 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 Kingsmen Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Kingsmen Resources.
Diversification Opportunities for Ivanhoe Energy and Kingsmen Resources
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ivanhoe and Kingsmen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Kingsmen Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsmen 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 Kingsmen Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsmen Resources has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Kingsmen Resources go up and down completely randomly.
Pair Corralation between Ivanhoe Energy and Kingsmen Resources
Assuming the 90 days horizon Ivanhoe Energy is expected to generate 7.65 times less return on investment than Kingsmen Resources. But when comparing it to its historical volatility, Ivanhoe Energy is 1.76 times less risky than Kingsmen Resources. It trades about 0.01 of its potential returns per unit of risk. Kingsmen Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Kingsmen Resources on August 26, 2024 and sell it today you would earn a total of 22.00 from holding Kingsmen Resources or generate 122.22% 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. Kingsmen Resources
Performance |
| Timeline |
| Ivanhoe Energy |
| Kingsmen Resources |
Ivanhoe Energy and Kingsmen Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Energy and Kingsmen Resources
The main advantage of trading using opposite Ivanhoe Energy and Kingsmen Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, Kingsmen 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 Kingsmen Resources will offset losses from the drop in Kingsmen Resources' long position.| Ivanhoe Energy vs. Questerre Energy | Ivanhoe Energy vs. Ivanhoe Mines | Ivanhoe Energy vs. Eastern Platinum Limited | Ivanhoe Energy vs. iShares Canadian HYBrid |
| Kingsmen Resources vs. First Majestic Silver | Kingsmen Resources vs. Ivanhoe Energy | Kingsmen Resources vs. Orezone Gold Corp | Kingsmen 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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