Correlation Between Origin Energy and Iron Road
Can any of the company-specific risk be diversified away by investing in both Origin Energy 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 Origin Energy and Iron Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Energy and Iron Road, you can compare the effects of market volatilities on Origin Energy 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 Origin Energy with a short position of Iron Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Energy and Iron Road.
Diversification Opportunities for Origin Energy and Iron Road
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Origin and Iron is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Origin Energy and Iron Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Road and Origin Energy 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 Origin Energy 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 Origin Energy i.e., Origin Energy and Iron Road go up and down completely randomly.
Pair Corralation between Origin Energy and Iron Road
Assuming the 90 days trading horizon Origin Energy is expected to generate 0.57 times more return on investment than Iron Road. However, Origin Energy is 1.74 times less risky than Iron Road. It trades about 0.01 of its potential returns per unit of risk. Iron Road is currently generating about -0.09 per unit of risk. If you would invest 984.00 in Origin Energy on January 14, 2025 and sell it today you would earn a total of 16.00 from holding Origin Energy or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Energy vs. Iron Road
Performance |
| Timeline |
| Origin Energy |
| Iron Road |
Origin Energy and Iron Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Energy and Iron Road
The main advantage of trading using opposite Origin Energy and Iron Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Energy 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.| Origin Energy vs. Westpac Banking | Origin Energy vs. ABACUS STORAGE KING | Origin Energy vs. Odyssey Energy | Origin Energy vs. Ecofibre |
| Iron Road vs. Northern Star Resources | Iron Road vs. Evolution Mining | Iron Road vs. Alcoa Inc | Iron Road vs. Bluescope Steel |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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