Correlation Between TPG Telecom and Iron Road
Can any of the company-specific risk be diversified away by investing in both TPG Telecom 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 TPG Telecom and Iron Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG Telecom and Iron Road, you can compare the effects of market volatilities on TPG Telecom 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 TPG Telecom with a short position of Iron Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG Telecom and Iron Road.
Diversification Opportunities for TPG Telecom and Iron Road
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TPG and Iron is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding TPG Telecom and Iron Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Road and TPG Telecom 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 TPG Telecom 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 TPG Telecom i.e., TPG Telecom and Iron Road go up and down completely randomly.
Pair Corralation between TPG Telecom and Iron Road
Assuming the 90 days trading horizon TPG Telecom is expected to generate 0.45 times more return on investment than Iron Road. However, TPG Telecom is 2.22 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 -0.04 per unit of risk. If you would invest 452.00 in TPG Telecom on September 1, 2024 and sell it today you would lose (2.00) from holding TPG Telecom or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPG Telecom vs. Iron Road
Performance |
| Timeline |
| TPG Telecom |
| Iron Road |
TPG Telecom and Iron Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG Telecom and Iron Road
The main advantage of trading using opposite TPG Telecom and Iron Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG Telecom 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.| TPG Telecom vs. ACDC Metals | TPG Telecom vs. Alternative Investment Trust | TPG Telecom vs. MFF Capital Investments | TPG Telecom vs. Flagship Investments |
| Iron Road vs. Northern Star Resources | Iron Road vs. Evolution Mining | Iron Road vs. Bluescope Steel | Iron Road vs. Sandfire Resources NL |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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