Correlation Between Ironbark Capital and Red Hill
Can any of the company-specific risk be diversified away by investing in both Ironbark Capital and Red Hill 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 Red Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ironbark Capital and Red Hill Iron, you can compare the effects of market volatilities on Ironbark Capital and Red Hill 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 Red Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ironbark Capital and Red Hill.
Diversification Opportunities for Ironbark Capital and Red Hill
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ironbark and Red is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ironbark Capital and Red Hill Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Hill 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 Red Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Hill Iron has no effect on the direction of Ironbark Capital i.e., Ironbark Capital and Red Hill go up and down completely randomly.
Pair Corralation between Ironbark Capital and Red Hill
Assuming the 90 days trading horizon Ironbark Capital is expected to under-perform the Red Hill. But the stock apears to be less risky and, when comparing its historical volatility, Ironbark Capital is 2.37 times less risky than Red Hill. The stock trades about -0.09 of its potential returns per unit of risk. The Red Hill Iron is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 395.00 in Red Hill Iron on August 29, 2024 and sell it today you would earn a total of 45.00 from holding Red Hill Iron or generate 11.39% 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. Red Hill Iron
Performance |
| Timeline |
| Ironbark Capital |
| Red Hill Iron |
Ironbark Capital and Red Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ironbark Capital and Red Hill
The main advantage of trading using opposite Ironbark Capital and Red Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ironbark Capital position performs unexpectedly, Red Hill 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 Red Hill will offset losses from the drop in Red Hill'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 |
| Red Hill vs. Northern Star Resources | Red Hill vs. Evolution Mining | Red Hill vs. Bluescope Steel | Red Hill 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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