Correlation Between Iluka Resources and Aeris Environmental
Can any of the company-specific risk be diversified away by investing in both Iluka Resources and Aeris Environmental 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 Iluka Resources and Aeris Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iluka Resources and Aeris Environmental, you can compare the effects of market volatilities on Iluka Resources and Aeris Environmental 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 Iluka Resources with a short position of Aeris Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iluka Resources and Aeris Environmental.
Diversification Opportunities for Iluka Resources and Aeris Environmental
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Iluka and Aeris is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources and Aeris Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeris Environmental and Iluka Resources 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 Iluka Resources are associated (or correlated) with Aeris Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeris Environmental has no effect on the direction of Iluka Resources i.e., Iluka Resources and Aeris Environmental go up and down completely randomly.
Pair Corralation between Iluka Resources and Aeris Environmental
Assuming the 90 days trading horizon Iluka Resources is expected to under-perform the Aeris Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Iluka Resources is 2.0 times less risky than Aeris Environmental. The stock trades about -0.04 of its potential returns per unit of risk. The Aeris Environmental is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.80 in Aeris Environmental on September 14, 2024 and sell it today you would earn a total of 5.70 from holding Aeris Environmental or generate 203.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iluka Resources vs. Aeris Environmental
Performance |
| Timeline |
| Iluka Resources |
| Aeris Environmental |
Iluka Resources and Aeris Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iluka Resources and Aeris Environmental
The main advantage of trading using opposite Iluka Resources and Aeris Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iluka Resources position performs unexpectedly, Aeris Environmental 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 Aeris Environmental will offset losses from the drop in Aeris Environmental's long position.| Iluka Resources vs. Aeris Environmental | Iluka Resources vs. Tombador Iron | Iluka Resources vs. Duxton Broadacre Farms | Iluka Resources vs. Ironbark Capital |
| Aeris Environmental vs. Southern Cross Gold | Aeris Environmental vs. Minbos Resources | Aeris Environmental vs. Tlou Energy | Aeris Environmental vs. Encounter Resources |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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