Correlation Between Baker Steel and Iron Mountain
Can any of the company-specific risk be diversified away by investing in both Baker Steel and Iron Mountain 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 Baker Steel and Iron Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baker Steel Resources and Iron Mountain, you can compare the effects of market volatilities on Baker Steel and Iron Mountain 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 Baker Steel with a short position of Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Steel and Iron Mountain.
Diversification Opportunities for Baker Steel and Iron Mountain
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baker and Iron is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Baker Steel Resources and Iron Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain and Baker Steel 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 Baker Steel Resources are associated (or correlated) with Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Baker Steel i.e., Baker Steel and Iron Mountain go up and down completely randomly.
Pair Corralation between Baker Steel and Iron Mountain
Assuming the 90 days trading horizon Baker Steel is expected to generate 1.96 times less return on investment than Iron Mountain. In addition to that, Baker Steel is 1.42 times more volatile than Iron Mountain. It trades about 0.05 of its total potential returns per unit of risk. Iron Mountain is currently generating about 0.14 per unit of volatility. If you would invest 10,590 in Iron Mountain on October 21, 2024 and sell it today you would earn a total of 460.00 from holding Iron Mountain or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Baker Steel Resources vs. Iron Mountain
Performance |
| Timeline |
| Baker Steel Resources |
| Iron Mountain |
Baker Steel and Iron Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Steel and Iron Mountain
The main advantage of trading using opposite Baker Steel and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Steel position performs unexpectedly, Iron Mountain 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 Iron Mountain will offset losses from the drop in Iron Mountain's long position.| Baker Steel vs. Sabre Insurance Group | Baker Steel vs. AMG Advanced Metallurgical | Baker Steel vs. Wheaton Precious Metals | Baker Steel vs. Central Asia Metals |
| Iron Mountain vs. Panther Metals PLC | Iron Mountain vs. Beowulf Mining | Iron Mountain vs. Broadridge Financial Solutions | Iron Mountain vs. Lundin Mining Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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