Correlation Between Contango ORE and Ioneer

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

By analyzing existing cross correlation between Contango ORE and ioneer Ltd American, you can compare the effects of market volatilities on Contango ORE and Ioneer 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 Contango ORE with a short position of Ioneer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contango ORE and Ioneer.

Diversification Opportunities for Contango ORE and Ioneer

0.91

Correlation Coefficient

Contango ORE  Ioneer

Almost no diversification

The 3 months correlation between Contango and Ioneer is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE and ioneer Ltd American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ioneer American and Contango ORE 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 Contango ORE are associated (or correlated) with Ioneer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ioneer American has no effect on the direction of Contango ORE i.e., Contango ORE and Ioneer go up and down completely randomly.

Pair Corralation between Contango ORE and Ioneer

Given the investment horizon of 90 days Contango ORE is expected to generate 3.62 times less return on investment than Ioneer. But when comparing it to its historical volatility, Contango ORE is 1.75 times less risky than Ioneer. It trades about 0.14 of its potential returns per unit of risk. ioneer Ltd American is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  396.00  in ioneer Ltd American on October 24, 2024 and sell it today you would earn a total of  127.00  from holding ioneer Ltd American or generate 32.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	94.74%
Values	Daily Returns

Contango ORE  vs.  ioneer Ltd American

Contango ORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contango ORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

ioneer American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ioneer Ltd American has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Contango ORE and Ioneer

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

The idea behind Contango ORE and ioneer Ltd American 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.