Correlation Between Iron Road and Kip McGrath
Can any of the company-specific risk be diversified away by investing in both Iron Road and Kip McGrath 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 Kip McGrath into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Road and Kip McGrath Education, you can compare the effects of market volatilities on Iron Road and Kip McGrath 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 Kip McGrath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and Kip McGrath.
Diversification Opportunities for Iron Road and Kip McGrath
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Iron and Kip is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road and Kip McGrath Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kip McGrath Education 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 Kip McGrath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kip McGrath Education has no effect on the direction of Iron Road i.e., Iron Road and Kip McGrath go up and down completely randomly.
Pair Corralation between Iron Road and Kip McGrath
Assuming the 90 days trading horizon Iron Road is expected to under-perform the Kip McGrath. In addition to that, Iron Road is 1.79 times more volatile than Kip McGrath Education. It trades about 0.0 of its total potential returns per unit of risk. Kip McGrath Education is currently generating about 0.27 per unit of volatility. If you would invest 41.00 in Kip McGrath Education on August 25, 2024 and sell it today you would earn a total of 5.00 from holding Kip McGrath Education or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Road vs. Kip McGrath Education
Performance |
| Timeline |
| Iron Road |
| Kip McGrath Education |
Iron Road and Kip McGrath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Road and Kip McGrath
The main advantage of trading using opposite Iron Road and Kip McGrath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, Kip McGrath 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 Kip McGrath will offset losses from the drop in Kip McGrath's long position.| Iron Road vs. Super Retail Group | Iron Road vs. Sky Metals | Iron Road vs. Cleanaway Waste Management | Iron Road vs. Alto Metals |
| Kip McGrath vs. Aneka Tambang Tbk | Kip McGrath vs. BHP Group Limited | Kip McGrath vs. Rio Tinto | Kip McGrath vs. Macquarie Group Ltd |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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