Correlation Between Ironbark Capital and Air New
Can any of the company-specific risk be diversified away by investing in both Ironbark Capital and Air New 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 Ironbark Capital and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ironbark Capital and Air New Zealand, you can compare the effects of market volatilities on Ironbark Capital and Air New 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 Ironbark Capital with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ironbark Capital and Air New.
Diversification Opportunities for Ironbark Capital and Air New
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ironbark and Air is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ironbark Capital and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and Ironbark Capital 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 Ironbark Capital are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Ironbark Capital i.e., Ironbark Capital and Air New go up and down completely randomly.
Pair Corralation between Ironbark Capital and Air New
Assuming the 90 days trading horizon Ironbark Capital is expected to generate 0.87 times more return on investment than Air New. However, Ironbark Capital is 1.15 times less risky than Air New. It trades about 0.03 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.03 per unit of risk. If you would invest 43.00 in Ironbark Capital on September 4, 2024 and sell it today you would earn a total of 3.00 from holding Ironbark Capital or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ironbark Capital vs. Air New Zealand
Performance |
| Timeline |
| Ironbark Capital |
| Air New Zealand |
Ironbark Capital and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ironbark Capital and Air New
The main advantage of trading using opposite Ironbark Capital and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ironbark Capital position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| Ironbark Capital vs. Australian Foundation Investment | Ironbark Capital vs. GQG Partners DRC | Ironbark Capital vs. MFF Capital Investments | Ironbark Capital vs. Metrics Master Income |
| Air New vs. Aneka Tambang Tbk | Air New vs. Macquarie Group | Air New vs. Macquarie Group Ltd | Air New vs. Challenger |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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