Correlation Between Ivanhoe Energy and Cascades

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Can any of the company-specific risk be diversified away by investing in both Ivanhoe Energy and Cascades 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 Cascades into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivanhoe Energy and Cascades, you can compare the effects of market volatilities on Ivanhoe Energy and Cascades 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 Cascades. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Energy and Cascades.

Diversification Opportunities for Ivanhoe Energy and Cascades

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ivanhoe and Cascades is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Cascades in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cascades 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 Cascades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cascades has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Cascades go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Cascades

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 2.76 times more return on investment than Cascades. However, Ivanhoe Energy is 2.76 times more volatile than Cascades. It trades about 0.16 of its potential returns per unit of risk. Cascades is currently generating about 0.36 per unit of risk. If you would invest  866.00  in Ivanhoe Energy on September 5, 2024 and sell it today you would earn a total of  369.00  from holding Ivanhoe Energy or generate 42.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ivanhoe Energy  vs.  Cascades

 Performance 
       Timeline  
Ivanhoe Energy 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ivanhoe Energy displayed solid returns over the last few months and may actually be approaching a breakup point.
Cascades 

Risk-Adjusted Performance

28 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Cascades are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cascades displayed solid returns over the last few months and may actually be approaching a breakup point.

Ivanhoe Energy and Cascades Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ivanhoe Energy and Cascades

The main advantage of trading using opposite Ivanhoe Energy and Cascades positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy position performs unexpectedly, Cascades 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 Cascades will offset losses from the drop in Cascades' long position.
The idea behind Ivanhoe Energy and Cascades 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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