Correlation Between Ivanhoe Energy and Pacific Bay

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

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

Diversification Opportunities for Ivanhoe Energy and Pacific Bay

-0.72

Correlation Coefficient

Ivanhoe Energy  Pacific Bay

Pay attention - limited upside

The 3 months correlation between Ivanhoe and Pacific is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and Pacific Bay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Bay Minerals 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 Pacific Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Bay Minerals has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and Pacific Bay go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Pacific Bay

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 32.8 times less return on investment than Pacific Bay. But when comparing it to its historical volatility, Ivanhoe Energy is 3.85 times less risky than Pacific Bay. It trades about 0.01 of its potential returns per unit of risk. Pacific Bay Minerals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Pacific Bay Minerals on October 1, 2024 and sell it today you would earn a total of  4.00  from holding Pacific Bay Minerals or generate 80.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Ivanhoe Energy  vs.  Pacific Bay Minerals

Ivanhoe Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pacific Bay Minerals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Bay Minerals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Pacific Bay showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ivanhoe Energy and Pacific Bay

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

The idea behind Ivanhoe Energy and Pacific Bay Minerals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.