Correlation Between Johnson Matthey and Iron Mountain
Can any of the company-specific risk be diversified away by investing in both Johnson Matthey and Iron Mountain 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 Johnson Matthey and Iron Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Matthey PLC and Iron Mountain, you can compare the effects of market volatilities on Johnson Matthey and Iron Mountain 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 Johnson Matthey with a short position of Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and Iron Mountain.
Diversification Opportunities for Johnson Matthey and Iron Mountain
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Johnson and Iron is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Matthey PLC and Iron Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain and Johnson Matthey 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 Johnson Matthey PLC are associated (or correlated) with Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Johnson Matthey i.e., Johnson Matthey and Iron Mountain go up and down completely randomly.
Pair Corralation between Johnson Matthey and Iron Mountain
Assuming the 90 days trading horizon Johnson Matthey PLC is expected to generate 0.49 times more return on investment than Iron Mountain. However, Johnson Matthey PLC is 2.03 times less risky than Iron Mountain. It trades about 0.24 of its potential returns per unit of risk. Iron Mountain is currently generating about -0.03 per unit of risk. If you would invest 133,700 in Johnson Matthey PLC on November 3, 2024 and sell it today you would earn a total of 9,500 from holding Johnson Matthey PLC or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Matthey PLC vs. Iron Mountain
Performance |
| Timeline |
| Johnson Matthey PLC |
| Iron Mountain |
Johnson Matthey and Iron Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Matthey and Iron Mountain
The main advantage of trading using opposite Johnson Matthey and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Matthey position performs unexpectedly, Iron Mountain 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 Iron Mountain will offset losses from the drop in Iron Mountain's long position.| Johnson Matthey vs. First Class Metals | Johnson Matthey vs. Power Metal Resources | Johnson Matthey vs. Coeur Mining | Johnson Matthey vs. Wheaton Precious Metals |
| Iron Mountain vs. Check Point Software | Iron Mountain vs. Gaztransport et Technigaz | Iron Mountain vs. Aeorema Communications Plc | Iron Mountain vs. Pressure Technologies Plc |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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