Correlation Between Ivanhoe Energy and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and Lithium Americas 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 Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Energy and Lithium Americas Corp, you can compare the effects of market volatilities on Ivanhoe Energy and Lithium Americas 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 Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Lithium Americas.
Diversification Opportunities for Ivanhoe Energy and Lithium Americas
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ivanhoe and Lithium is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Lithium Americas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Americas Corp 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 Lithium Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Americas Corp has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Lithium Americas go up and down completely randomly.
Pair Corralation between Ivanhoe Energy and Lithium Americas
Assuming the 90 days horizon Ivanhoe Energy is expected to generate 1.16 times less return on investment than Lithium Americas. But when comparing it to its historical volatility, Ivanhoe Energy is 1.24 times less risky than Lithium Americas. It trades about 0.02 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 581.00 in Lithium Americas Corp on August 29, 2024 and sell it today you would lose (26.00) from holding Lithium Americas Corp or give up 4.48% 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. Lithium Americas Corp
Performance |
| Timeline |
| Ivanhoe Energy |
| Lithium Americas Corp |
Ivanhoe Energy and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Energy and Lithium Americas
The main advantage of trading using opposite Ivanhoe Energy and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, Lithium Americas 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 Lithium Americas will offset losses from the drop in Lithium Americas' long position.| Ivanhoe Energy vs. Questerre Energy | Ivanhoe Energy vs. Ivanhoe Mines | Ivanhoe Energy vs. Eastern Platinum Limited |
| Lithium Americas vs. American Lithium Corp | Lithium Americas vs. Ballard Power Systems | Lithium Americas vs. Lightspeed Commerce | Lithium Americas vs. WELL Health Technologies |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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