Correlation Between Iron Road and Acrow
Can any of the company-specific risk be diversified away by investing in both Iron Road and Acrow 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 Acrow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Road and Acrow Limited, you can compare the effects of market volatilities on Iron Road and Acrow 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 Acrow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and Acrow.
Diversification Opportunities for Iron Road and Acrow
Very good diversification
The 3 months correlation between Iron and Acrow is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road and Acrow Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acrow 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 Acrow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acrow Limited has no effect on the direction of Iron Road i.e., Iron Road and Acrow go up and down completely randomly.
Pair Corralation between Iron Road and Acrow
Assuming the 90 days trading horizon Iron Road is expected to under-perform the Acrow. In addition to that, Iron Road is 1.85 times more volatile than Acrow Limited. It trades about -0.03 of its total potential returns per unit of risk. Acrow Limited is currently generating about 0.07 per unit of volatility. If you would invest 56.00 in Acrow Limited on September 14, 2024 and sell it today you would earn a total of 46.00 from holding Acrow Limited or generate 82.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Iron Road vs. Acrow Limited
Performance |
| Timeline |
| Iron Road |
| Acrow Limited |
Iron Road and Acrow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Road and Acrow
The main advantage of trading using opposite Iron Road and Acrow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, Acrow 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 Acrow will offset losses from the drop in Acrow's long position.| Iron Road vs. Northern Star Resources | Iron Road vs. Evolution Mining | Iron Road vs. Bluescope Steel | Iron Road vs. Sandfire Resources NL |
| Acrow vs. Iron Road | Acrow vs. Duxton Broadacre Farms | Acrow vs. Kip McGrath Education | Acrow vs. Auctus Alternative Investments |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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