Correlation Between L1 Long and Ironbark Capital
Can any of the company-specific risk be diversified away by investing in both L1 Long and Ironbark Capital 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 L1 Long and Ironbark Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L1 Long Short and Ironbark Capital, you can compare the effects of market volatilities on L1 Long and Ironbark Capital 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 L1 Long with a short position of Ironbark Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of L1 Long and Ironbark Capital.
Diversification Opportunities for L1 Long and Ironbark Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LSF and Ironbark is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding L1 Long Short and Ironbark Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironbark Capital and L1 Long 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 L1 Long Short are associated (or correlated) with Ironbark Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ironbark Capital has no effect on the direction of L1 Long i.e., L1 Long and Ironbark Capital go up and down completely randomly.
Pair Corralation between L1 Long and Ironbark Capital
Assuming the 90 days trading horizon L1 Long Short is expected to generate 1.57 times more return on investment than Ironbark Capital. However, L1 Long is 1.57 times more volatile than Ironbark Capital. It trades about 0.02 of its potential returns per unit of risk. Ironbark Capital is currently generating about -0.09 per unit of risk. If you would invest 312.00 in L1 Long Short on August 29, 2024 and sell it today you would earn a total of 1.00 from holding L1 Long Short or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
L1 Long Short vs. Ironbark Capital
Performance |
| Timeline |
| L1 Long Short |
| Ironbark Capital |
L1 Long and Ironbark Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L1 Long and Ironbark Capital
The main advantage of trading using opposite L1 Long and Ironbark Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L1 Long position performs unexpectedly, Ironbark Capital 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 Ironbark Capital will offset losses from the drop in Ironbark Capital's long position.| L1 Long vs. National Australia Bank | L1 Long vs. National Australia Bank | L1 Long vs. Westpac Banking | L1 Long vs. National Australia Bank |
| Ironbark Capital vs. Australian Foundation Investment | Ironbark Capital vs. GQG Partners DRC | Ironbark Capital vs. Metrics Master Income | Ironbark Capital vs. L1 Long Short |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Positions Ratings 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 | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |