Correlation Between K2 Asset and Iron Road
Can any of the company-specific risk be diversified away by investing in both K2 Asset and Iron Road 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 K2 Asset and Iron Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Asset Management and Iron Road, you can compare the effects of market volatilities on K2 Asset and Iron Road 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 K2 Asset with a short position of Iron Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and Iron Road.
Diversification Opportunities for K2 Asset and Iron Road
Pay attention - limited upside
The 3 months correlation between KAM and Iron is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management and Iron Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Road and K2 Asset 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 K2 Asset Management are associated (or correlated) with Iron Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Road has no effect on the direction of K2 Asset i.e., K2 Asset and Iron Road go up and down completely randomly.
Pair Corralation between K2 Asset and Iron Road
Assuming the 90 days trading horizon K2 Asset Management is expected to under-perform the Iron Road. But the stock apears to be less risky and, when comparing its historical volatility, K2 Asset Management is 1.75 times less risky than Iron Road. The stock trades about -0.32 of its potential returns per unit of risk. The Iron Road is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 5.90 in Iron Road on October 11, 2024 and sell it today you would lose (0.20) from holding Iron Road or give up 3.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Asset Management vs. Iron Road
Performance |
| Timeline |
| K2 Asset Management |
| Iron Road |
K2 Asset and Iron Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Asset and Iron Road
The main advantage of trading using opposite K2 Asset and Iron Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset position performs unexpectedly, Iron Road 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 Road will offset losses from the drop in Iron Road's long position.| K2 Asset vs. Liberty Financial Group | K2 Asset vs. Perpetual Credit Income | K2 Asset vs. Kkr Credit Income | K2 Asset vs. BSP Financial Group |
| Iron Road vs. Platinum Asset Management | Iron Road vs. Sky Metals | Iron Road vs. K2 Asset Management | Iron Road vs. Aussie Broadband |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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