Correlation Between Ivanhoe Energy and Dios Exploration

Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and Dios Exploration 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 Dios Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ivanhoe Energy and Dios Exploration, you can compare the effects of market volatilities on Ivanhoe Energy and Dios Exploration 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 Dios Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Dios Exploration.

Diversification Opportunities for Ivanhoe Energy and Dios Exploration

0.23

Correlation Coefficient

Ivanhoe Energy  Dios Exploration

Modest diversification

The 3 months correlation between Ivanhoe and Dios is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Dios Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dios Exploration 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 Dios Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dios Exploration has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Dios Exploration go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Dios Exploration

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 0.57 times more return on investment than Dios Exploration. However, Ivanhoe Energy is 1.75 times less risky than Dios Exploration. It trades about 0.16 of its potential returns per unit of risk. Dios Exploration is currently generating about 0.03 per unit of risk. If you would invest  1,214  in Ivanhoe Energy on February 24, 2024 and sell it today you would earn a total of  328.00  from holding Ivanhoe Energy or generate 27.02% 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.  Dios Exploration

Ivanhoe Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Ivanhoe Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Dios Exploration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dios Exploration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Dios Exploration may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Ivanhoe Energy and Dios Exploration

The main advantage of trading using opposite Ivanhoe Energy and Dios Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, Dios Exploration 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 Dios Exploration will offset losses from the drop in Dios Exploration's long position.

The idea behind Ivanhoe Energy and Dios Exploration pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.