Correlation Between Ivanhoe Energy and Commander Resources

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

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

Diversification Opportunities for Ivanhoe Energy and Commander Resources

0.27

Correlation Coefficient

Ivanhoe Energy  Commander Resources

Modest diversification

The 3 months correlation between Ivanhoe and Commander is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Commander Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commander Resources 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 Commander Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commander Resources has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Commander Resources go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Commander Resources

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Commander Resources. But the stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Energy is 1.98 times less risky than Commander Resources. The stock trades about -0.2 of its potential returns per unit of risk. The Commander Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Commander Resources on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Commander Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Ivanhoe Energy  vs.  Commander Resources

Ivanhoe Energy

Risk-Adjusted Performance

12 of 100

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.

Commander Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commander Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Commander Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ivanhoe Energy and Commander Resources

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

The idea behind Ivanhoe Energy and Commander Resources 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.