Correlation Between Ivanhoe Energy and Sigma Lithium
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and Sigma Lithium 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 Sigma Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Energy and Sigma Lithium Resources, you can compare the effects of market volatilities on Ivanhoe Energy and Sigma Lithium 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 Sigma Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Sigma Lithium.
Diversification Opportunities for Ivanhoe Energy and Sigma Lithium
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ivanhoe and Sigma is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Sigma Lithium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigma Lithium 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 Sigma Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigma Lithium Resources has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Sigma Lithium go up and down completely randomly.
Pair Corralation between Ivanhoe Energy and Sigma Lithium
Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Sigma Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 1.22 times less risky than Sigma Lithium. The stock trades about -0.34 of its potential returns per unit of risk. The Sigma Lithium Resources is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 2,062 in Sigma Lithium Resources on August 28, 2024 and sell it today you would lose (128.00) from holding Sigma Lithium Resources or give up 6.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivanhoe Energy vs. Sigma Lithium Resources
Performance |
| Timeline |
| Ivanhoe Energy |
| Sigma Lithium Resources |
Ivanhoe Energy and Sigma Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Energy and Sigma Lithium
The main advantage of trading using opposite Ivanhoe Energy and Sigma Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, Sigma Lithium 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 Sigma Lithium will offset losses from the drop in Sigma Lithium'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 |
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 Stocks Directory module to find actively traded stocks across global markets.
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