Correlation Between Enbridge H and Ivanhoe Energy

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

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

Diversification Opportunities for Enbridge H and Ivanhoe Energy

-0.64

Correlation Coefficient

Enbridge H  Ivanhoe Energy

Excellent diversification

The 3 months correlation between Enbridge and Ivanhoe is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge H Cum and Ivanhoe Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Energy and Enbridge H 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 Enbridge H Cum are associated (or correlated) with Ivanhoe Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Energy has no effect on the direction of Enbridge H i.e., Enbridge H and Ivanhoe Energy go up and down completely randomly.

Pair Corralation between Enbridge H and Ivanhoe Energy

Assuming the 90 days trading horizon Enbridge H Cum is expected to generate 0.17 times more return on investment than Ivanhoe Energy. However, Enbridge H Cum is 5.78 times less risky than Ivanhoe Energy. It trades about 0.1 of its potential returns per unit of risk. Ivanhoe Energy is currently generating about -0.01 per unit of risk. If you would invest  1,671  in Enbridge H Cum on September 23, 2024 and sell it today you would earn a total of  361.00  from holding Enbridge H Cum or generate 21.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Enbridge H Cum  vs.  Ivanhoe Energy

Enbridge H Cum

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge H Cum are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Enbridge H is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ivanhoe Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ivanhoe Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Enbridge H and Ivanhoe Energy

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

The idea behind Enbridge H Cum and Ivanhoe Energy 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.