Correlation Between Ivanhoe Energy and West Fraser
Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and West Fraser 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 West Fraser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Energy and West Fraser Timber, you can compare the effects of market volatilities on Ivanhoe Energy and West Fraser 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 West Fraser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and West Fraser.
Diversification Opportunities for Ivanhoe Energy and West Fraser
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ivanhoe and West is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and West Fraser Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Fraser Timber 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 West Fraser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Fraser Timber has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and West Fraser go up and down completely randomly.
Pair Corralation between Ivanhoe Energy and West Fraser
Assuming the 90 days horizon Ivanhoe Energy is expected to generate 1.63 times less return on investment than West Fraser. In addition to that, Ivanhoe Energy is 2.28 times more volatile than West Fraser Timber. It trades about 0.01 of its total potential returns per unit of risk. West Fraser Timber is currently generating about 0.04 per unit of volatility. If you would invest 10,194 in West Fraser Timber on August 29, 2024 and sell it today you would earn a total of 3,646 from holding West Fraser Timber or generate 35.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivanhoe Energy vs. West Fraser Timber
Performance |
| Timeline |
| Ivanhoe Energy |
| West Fraser Timber |
Ivanhoe Energy and West Fraser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivanhoe Energy and West Fraser
The main advantage of trading using opposite Ivanhoe Energy and West Fraser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, West Fraser 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 West Fraser will offset losses from the drop in West Fraser's long position.| Ivanhoe Energy vs. Questerre Energy | Ivanhoe Energy vs. Ivanhoe Mines | Ivanhoe Energy vs. Eastern Platinum Limited |
| West Fraser vs. Interfor Corp | West Fraser vs. Canfor | West Fraser vs. Stella Jones | West Fraser vs. Western Forest Products |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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