Correlation Between Iron Road and ARN Media
Can any of the company-specific risk be diversified away by investing in both Iron Road and ARN Media 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 Iron Road and ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Road and ARN Media Limited, you can compare the effects of market volatilities on Iron Road and ARN Media 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 Iron Road with a short position of ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and ARN Media.
Diversification Opportunities for Iron Road and ARN Media
Very good diversification
The 3 months correlation between Iron and ARN is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited and Iron Road 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 Iron Road are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Iron Road i.e., Iron Road and ARN Media go up and down completely randomly.
Pair Corralation between Iron Road and ARN Media
Assuming the 90 days trading horizon Iron Road is expected to under-perform the ARN Media. But the stock apears to be less risky and, when comparing its historical volatility, Iron Road is 1.52 times less risky than ARN Media. The stock trades about -0.11 of its potential returns per unit of risk. The ARN Media Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 72.00 in ARN Media Limited on September 13, 2024 and sell it today you would earn a total of 3.00 from holding ARN Media Limited or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Road vs. ARN Media Limited
Performance |
| Timeline |
| Iron Road |
| ARN Media Limited |
Iron Road and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Road and ARN Media
The main advantage of trading using opposite Iron Road and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.| Iron Road vs. MetalsGrove Mining | Iron Road vs. Truscott Mining Corp | Iron Road vs. Falcon Metals | Iron Road vs. Group 6 Metals |
| ARN Media vs. REGAL ASIAN INVESTMENTS | ARN Media vs. National Storage REIT | ARN Media vs. Carlton Investments | ARN Media vs. ABACUS STORAGE KING |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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