Correlation Between Iron Mountain and Rio Tinto

Can any of the company-specific risk be diversified away by investing in both Iron Mountain and Rio Tinto 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 Iron Mountain and Rio Tinto into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iron Mountain and Rio Tinto PLC, you can compare the effects of market volatilities on Iron Mountain and Rio Tinto 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 Iron Mountain with a short position of Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Mountain and Rio Tinto.

Diversification Opportunities for Iron Mountain and Rio Tinto

-0.28

Correlation Coefficient

Iron Mountain  Rio Tinto

Very good diversification

The 3 months correlation between Iron and Rio is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain and Rio Tinto PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto PLC and Iron Mountain 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 Iron Mountain are associated (or correlated) with Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto PLC has no effect on the direction of Iron Mountain i.e., Iron Mountain and Rio Tinto go up and down completely randomly.

Pair Corralation between Iron Mountain and Rio Tinto

Assuming the 90 days trading horizon Iron Mountain is expected to under-perform the Rio Tinto. In addition to that, Iron Mountain is 2.04 times more volatile than Rio Tinto PLC. It trades about -0.11 of its total potential returns per unit of risk. Rio Tinto PLC is currently generating about 0.1 per unit of volatility. If you would invest  452,474  in Rio Tinto PLC on December 21, 2024 and sell it today you would earn a total of  31,826  from holding Rio Tinto PLC or generate 7.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Iron Mountain  vs.  Rio Tinto PLC

Iron Mountain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iron Mountain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Rio Tinto PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rio Tinto PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Rio Tinto may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Iron Mountain and Rio Tinto

The main advantage of trading using opposite Iron Mountain and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Mountain position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.

The idea behind Iron Mountain and Rio Tinto PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.