Correlation Between Embrace Change and Iris Energy

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

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

Diversification Opportunities for Embrace Change and Iris Energy

-0.35

Correlation Coefficient

Embrace Change  Iris Energy

Very good diversification

The 3 months correlation between Embrace and Iris is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy and Embrace Change 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 Embrace Change Acquisition 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 Embrace Change i.e., Embrace Change and Iris Energy go up and down completely randomly.

Pair Corralation between Embrace Change and Iris Energy

Assuming the 90 days horizon Embrace Change Acquisition is expected to under-perform the Iris Energy. But the stock apears to be less risky and, when comparing its historical volatility, Embrace Change Acquisition is 10.27 times less risky than Iris Energy. The stock trades about -0.05 of its potential returns per unit of risk. The Iris Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  690.00  in Iris Energy on September 2, 2024 and sell it today you would earn a total of  661.00  from holding Iris Energy or generate 95.8% return on investment over 90 days.

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

Embrace Change Acquisition  vs.  Iris Energy

Embrace Change Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embrace Change Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Embrace Change is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Iris Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iris Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak 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 Embrace Change and Iris Energy

The main advantage of trading using opposite Embrace Change and Iris Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change 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 Embrace Change Acquisition 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.