Correlation Between Ironbark Capital and Champion Iron
Can any of the company-specific risk be diversified away by investing in both Ironbark Capital and Champion Iron 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 Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ironbark Capital and Champion Iron, you can compare the effects of market volatilities on Ironbark Capital and Champion Iron 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 Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ironbark Capital and Champion Iron.
Diversification Opportunities for Ironbark Capital and Champion Iron
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ironbark and Champion is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ironbark Capital and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron 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 Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of Ironbark Capital i.e., Ironbark Capital and Champion Iron go up and down completely randomly.
Pair Corralation between Ironbark Capital and Champion Iron
Assuming the 90 days trading horizon Ironbark Capital is expected to generate 0.42 times more return on investment than Champion Iron. However, Ironbark Capital is 2.41 times less risky than Champion Iron. It trades about -0.09 of its potential returns per unit of risk. Champion Iron is currently generating about -0.08 per unit of risk. If you would invest 47.00 in Ironbark Capital on August 29, 2024 and sell it today you would lose (1.00) from holding Ironbark Capital or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ironbark Capital vs. Champion Iron
Performance |
| Timeline |
| Ironbark Capital |
| Champion Iron |
Ironbark Capital and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ironbark Capital and Champion Iron
The main advantage of trading using opposite Ironbark Capital and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ironbark Capital position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| Ironbark Capital vs. Australian Foundation Investment | Ironbark Capital vs. GQG Partners DRC | Ironbark Capital vs. Metrics Master Income | Ironbark Capital vs. L1 Long Short |
| Champion Iron vs. Northern Star Resources | Champion Iron vs. Evolution Mining | Champion Iron vs. Bluescope Steel | Champion Iron vs. Sandfire Resources NL |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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