Correlation Between New Oriental and Iron Mountain
Can any of the company-specific risk be diversified away by investing in both New Oriental 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 New Oriental and Iron Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and Iron Mountain Incorporated, you can compare the effects of market volatilities on New Oriental 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 New Oriental with a short position of Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Iron Mountain.
Diversification Opportunities for New Oriental and Iron Mountain
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Iron is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Iron Mountain Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain and New Oriental 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 New Oriental Education 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 New Oriental i.e., New Oriental and Iron Mountain go up and down completely randomly.
Pair Corralation between New Oriental and Iron Mountain
Assuming the 90 days trading horizon New Oriental Education is expected to under-perform the Iron Mountain. In addition to that, New Oriental is 1.85 times more volatile than Iron Mountain Incorporated. It trades about -0.03 of its total potential returns per unit of risk. Iron Mountain Incorporated is currently generating about 0.22 per unit of volatility. If you would invest 44,544 in Iron Mountain Incorporated on August 25, 2024 and sell it today you would earn a total of 24,462 from holding Iron Mountain Incorporated or generate 54.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.63% |
| Values | Daily Returns |
New Oriental Education vs. Iron Mountain Incorporated
Performance |
| Timeline |
| New Oriental Education |
| Iron Mountain |
New Oriental and Iron Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Iron Mountain
The main advantage of trading using opposite New Oriental and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental 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.| New Oriental vs. TAL Education Group | New Oriental vs. Fras le SA | New Oriental vs. Clave Indices De | New Oriental vs. BTG Pactual Logstica |
| Iron Mountain vs. Warner Music Group | Iron Mountain vs. New Oriental Education | Iron Mountain vs. BIONTECH SE DRN | Iron Mountain vs. Zoom Video Communications |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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