Correlation Between Iron Road and Hub24
Can any of the company-specific risk be diversified away by investing in both Iron Road and Hub24 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 Hub24 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Road and Hub24, you can compare the effects of market volatilities on Iron Road and Hub24 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 Hub24. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and Hub24.
Diversification Opportunities for Iron Road and Hub24
Pay attention - limited upside
The 3 months correlation between Iron and Hub24 is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road and Hub24 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub24 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 Hub24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub24 has no effect on the direction of Iron Road i.e., Iron Road and Hub24 go up and down completely randomly.
Pair Corralation between Iron Road and Hub24
Assuming the 90 days trading horizon Iron Road is expected to under-perform the Hub24. In addition to that, Iron Road is 1.73 times more volatile than Hub24. It trades about -0.04 of its total potential returns per unit of risk. Hub24 is currently generating about 0.24 per unit of volatility. If you would invest 6,959 in Hub24 on September 5, 2024 and sell it today you would earn a total of 566.00 from holding Hub24 or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Road vs. Hub24
Performance |
| Timeline |
| Iron Road |
| Hub24 |
Iron Road and Hub24 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Road and Hub24
The main advantage of trading using opposite Iron Road and Hub24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, Hub24 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 Hub24 will offset losses from the drop in Hub24's long position.| Iron Road vs. Northern Star Resources | Iron Road vs. Sandfire Resources NL | Iron Road vs. Aneka Tambang Tbk |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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