Correlation Between Chemours and Iris Energy
Can any of the company-specific risk be diversified away by investing in both Chemours and Iris 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 Chemours and Iris Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Iris Energy, you can compare the effects of market volatilities on Chemours and Iris 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 Chemours with a short position of Iris Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Iris Energy.
Diversification Opportunities for Chemours and Iris Energy
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chemours and Iris is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy and Chemours 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 Chemours Co are associated (or correlated) with Iris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Energy has no effect on the direction of Chemours i.e., Chemours and Iris Energy go up and down completely randomly.
Pair Corralation between Chemours and Iris Energy
Allowing for the 90-day total investment horizon Chemours is expected to generate 2.35 times less return on investment than Iris Energy. But when comparing it to its historical volatility, Chemours Co is 2.45 times less risky than Iris Energy. It trades about 0.24 of its potential returns per unit of risk. Iris Energy is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 912.00 in Iris Energy on September 1, 2024 and sell it today you would earn a total of 439.00 from holding Iris Energy or generate 48.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Iris Energy
Performance |
| Timeline |
| Chemours |
| Iris Energy |
Chemours and Iris Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Iris Energy
The main advantage of trading using opposite Chemours and Iris Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Iris 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 Iris Energy will offset losses from the drop in Iris Energy's long position.| Chemours vs. International Flavors Fragrances | Chemours vs. Air Products and | Chemours vs. PPG Industries | Chemours vs. Linde plc Ordinary |
| Iris Energy vs. Pentair PLC | Iris Energy vs. AerSale Corp | Iris Energy vs. Hawkins | Iris Energy vs. Chemours Co |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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