Correlation Between Group 6 and Iron Road
Can any of the company-specific risk be diversified away by investing in both Group 6 and Iron Road 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 Group 6 and Iron Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 6 Metals and Iron Road, you can compare the effects of market volatilities on Group 6 and Iron Road 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 Group 6 with a short position of Iron Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 6 and Iron Road.
Diversification Opportunities for Group 6 and Iron Road
Pay attention - limited upside
The 3 months correlation between Group and Iron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Group 6 Metals and Iron Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Road and Group 6 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 Group 6 Metals are associated (or correlated) with Iron Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Road has no effect on the direction of Group 6 i.e., Group 6 and Iron Road go up and down completely randomly.
Pair Corralation between Group 6 and Iron Road
Assuming the 90 days trading horizon Group 6 Metals is expected to under-perform the Iron Road. In addition to that, Group 6 is 1.58 times more volatile than Iron Road. It trades about -0.05 of its total potential returns per unit of risk. Iron Road is currently generating about -0.03 per unit of volatility. If you would invest 12.00 in Iron Road on November 1, 2024 and sell it today you would lose (6.70) from holding Iron Road or give up 55.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Group 6 Metals vs. Iron Road
Performance |
| Timeline |
| Group 6 Metals |
| Iron Road |
Group 6 and Iron Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 6 and Iron Road
The main advantage of trading using opposite Group 6 and Iron Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 6 position performs unexpectedly, Iron Road 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 Road will offset losses from the drop in Iron Road's long position.| Group 6 vs. Ainsworth Game Technology | Group 6 vs. Treasury Wine Estates | Group 6 vs. Global Health | Group 6 vs. Fisher Paykel Healthcare |
| Iron Road vs. Super Retail Group | Iron Road vs. Collins Foods | Iron Road vs. Cleanaway Waste Management | Iron Road vs. Navigator Global Investments |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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