Correlation Between Ivanhoe Energy and Imaflex

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

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

Diversification Opportunities for Ivanhoe Energy and Imaflex

0.67

Correlation Coefficient

Ivanhoe Energy  Imaflex

Poor diversification

The 12 months correlation between Ivanhoe and Imaflex is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Imaflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imaflex 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 Imaflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imaflex has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Imaflex go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Imaflex

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Imaflex. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 1.3 times less risky than Imaflex. The stock trades about -0.18 of its potential returns per unit of risk. The Imaflex is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Imaflex on March 9, 2024 and sell it today you would earn a total of  16.00  from holding Imaflex or generate 21.33% return on investment over 90 days.

Time Period	12 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Ivanhoe Energy  vs.  Imaflex

Ivanhoe Energy

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Ivanhoe Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ivanhoe Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Imaflex

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Imaflex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Imaflex is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ivanhoe Energy and Imaflex

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

The idea behind Ivanhoe Energy and Imaflex 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.