Correlation Between Iron Road and Marks
Can any of the company-specific risk be diversified away by investing in both Iron Road and Marks 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 Iron Road and Marks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Road Limited and Marks and Spencer, you can compare the effects of market volatilities on Iron Road and Marks 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 Iron Road with a short position of Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and Marks.
Diversification Opportunities for Iron Road and Marks
Very good diversification
The 3 months correlation between Iron and Marks is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road Limited and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer and Iron Road 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 Iron Road Limited are associated (or correlated) with Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Iron Road i.e., Iron Road and Marks go up and down completely randomly.
Pair Corralation between Iron Road and Marks
Assuming the 90 days horizon Iron Road Limited is expected to under-perform the Marks. In addition to that, Iron Road is 4.32 times more volatile than Marks and Spencer. It trades about 0.0 of its total potential returns per unit of risk. Marks and Spencer is currently generating about 0.12 per unit of volatility. If you would invest 361.00 in Marks and Spencer on September 5, 2024 and sell it today you would earn a total of 108.00 from holding Marks and Spencer or generate 29.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Iron Road Limited vs. Marks and Spencer
Performance |
| Timeline |
| Iron Road Limited |
| Marks and Spencer |
Iron Road and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Road and Marks
The main advantage of trading using opposite Iron Road and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| Iron Road vs. Strategic Investments AS | Iron Road vs. CDL INVESTMENT | Iron Road vs. Gladstone Investment | Iron Road vs. Apollo Investment Corp |
| Marks vs. CarsalesCom | Marks vs. MAVEN WIRELESS SWEDEN | Marks vs. Entravision Communications | Marks vs. TRADEGATE |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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