Correlation Between CleanSpark and Iris Energy

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

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

Diversification Opportunities for CleanSpark and Iris Energy

0.66

Correlation Coefficient

CleanSpark  Iris Energy

Poor diversification

The 3 months correlation between CleanSpark and Iris is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CleanSpark and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy and CleanSpark 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 CleanSpark are associated (or correlated) with Iris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Energy has no effect on the direction of CleanSpark i.e., CleanSpark and Iris Energy go up and down completely randomly.

Pair Corralation between CleanSpark and Iris Energy

Given the investment horizon of 90 days CleanSpark is expected to under-perform the Iris Energy. But the stock apears to be less risky and, when comparing its historical volatility, CleanSpark is 1.21 times less risky than Iris Energy. The stock trades about -0.4 of its potential returns per unit of risk. The Iris Energy is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,262  in Iris Energy on October 1, 2024 and sell it today you would lose (191.00) from holding Iris Energy or give up 15.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CleanSpark  vs.  Iris Energy

CleanSpark

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CleanSpark are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, CleanSpark disclosed solid returns over the last few months and may actually be approaching a breakup point.

Iris Energy

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Iris Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Iris Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CleanSpark and Iris Energy

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

The idea behind CleanSpark and Iris Energy 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.