Correlation Between Ivanhoe Energy and Patagonia Gold
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and Patagonia Gold 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 Patagonia Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Energy and Patagonia Gold Corp, you can compare the effects of market volatilities on Ivanhoe Energy and Patagonia Gold 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 Patagonia Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Patagonia Gold.
Diversification Opportunities for Ivanhoe Energy and Patagonia Gold
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ivanhoe and Patagonia is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Patagonia Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patagonia Gold 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 Patagonia Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patagonia Gold Corp has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Patagonia Gold go up and down completely randomly.
Pair Corralation between Ivanhoe Energy and Patagonia Gold
Assuming the 90 days horizon Ivanhoe Energy is expected to generate 10.12 times less return on investment than Patagonia Gold. But when comparing it to its historical volatility, Ivanhoe Energy is 3.2 times less risky than Patagonia Gold. It trades about 0.02 of its potential returns per unit of risk. Patagonia Gold Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Patagonia Gold Corp on August 25, 2024 and sell it today you would earn a total of 0.50 from holding Patagonia Gold Corp or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivanhoe Energy vs. Patagonia Gold Corp
Performance |
| Timeline |
| Ivanhoe Energy |
| Patagonia Gold Corp |
Ivanhoe Energy and Patagonia Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Energy and Patagonia Gold
The main advantage of trading using opposite Ivanhoe Energy and Patagonia Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, Patagonia Gold 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 Patagonia Gold will offset losses from the drop in Patagonia Gold'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 |
| Patagonia Gold vs. First Majestic Silver | Patagonia Gold vs. Ivanhoe Energy | Patagonia Gold vs. Orezone Gold Corp | Patagonia Gold 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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