Correlation Between Auxly Cannabis and Ivanhoe Energy

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

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

Diversification Opportunities for Auxly Cannabis and Ivanhoe Energy

0.82

Correlation Coefficient

Auxly Cannabis  Ivanhoe Energy

Very poor diversification

The 3 months correlation between Auxly and Ivanhoe is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Auxly Cannabis Group and Ivanhoe Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Energy and Auxly Cannabis 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 Auxly Cannabis Group 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 Auxly Cannabis i.e., Auxly Cannabis and Ivanhoe Energy go up and down completely randomly.

Pair Corralation between Auxly Cannabis and Ivanhoe Energy

Assuming the 90 days trading horizon Auxly Cannabis Group is expected to generate 1.7 times more return on investment than Ivanhoe Energy. However, Auxly Cannabis is 1.7 times more volatile than Ivanhoe Energy. It trades about 0.17 of its potential returns per unit of risk. Ivanhoe Energy is currently generating about 0.27 per unit of risk. If you would invest  8.50  in Auxly Cannabis Group on April 25, 2025 and sell it today you would earn a total of  6.50  from holding Auxly Cannabis Group or generate 76.47% return on investment over 90 days.

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

Auxly Cannabis Group  vs.  Ivanhoe Energy

Auxly Cannabis Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Auxly Cannabis Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Auxly Cannabis displayed solid returns over the last few months and may actually be approaching a breakup point.

Ivanhoe Energy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 21 (%) 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.

Pair Trading with Auxly Cannabis and Ivanhoe Energy

The main advantage of trading using opposite Auxly Cannabis and Ivanhoe Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auxly Cannabis 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 Auxly Cannabis Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.