Correlation Between Ironbark Capital and EP Financial
Can any of the company-specific risk be diversified away by investing in both Ironbark Capital and EP Financial 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 EP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ironbark Capital and EP Financial Group, you can compare the effects of market volatilities on Ironbark Capital and EP Financial 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 EP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ironbark Capital and EP Financial.
Diversification Opportunities for Ironbark Capital and EP Financial
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ironbark and EP1 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ironbark Capital and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group 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 EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Ironbark Capital i.e., Ironbark Capital and EP Financial go up and down completely randomly.
Pair Corralation between Ironbark Capital and EP Financial
Assuming the 90 days trading horizon Ironbark Capital is expected to generate 4.75 times less return on investment than EP Financial. But when comparing it to its historical volatility, Ironbark Capital is 2.54 times less risky than EP Financial. It trades about 0.01 of its potential returns per unit of risk. EP Financial Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 50.00 in EP Financial Group on September 2, 2024 and sell it today you would earn a total of 2.00 from holding EP Financial Group or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ironbark Capital vs. EP Financial Group
Performance |
| Timeline |
| Ironbark Capital |
| EP Financial Group |
Ironbark Capital and EP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ironbark Capital and EP Financial
The main advantage of trading using opposite Ironbark Capital and EP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ironbark Capital position performs unexpectedly, EP Financial 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 EP Financial will offset losses from the drop in EP Financial's long position.| Ironbark Capital vs. Garda Diversified Ppty | Ironbark Capital vs. Sandon Capital Investments | Ironbark Capital vs. Duxton Broadacre Farms | Ironbark Capital vs. Hotel Property Investments |
| EP Financial vs. WA1 Resources | EP Financial vs. Predictive Discovery | EP Financial vs. Cooper Metals | EP Financial vs. OD6 Metals |
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 Correlations module to find global opportunities by holding instruments from different markets.
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