Correlation Between FirstCash and Iris Energy

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

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

Diversification Opportunities for FirstCash and Iris Energy

-0.35

Correlation Coefficient

FirstCash  Iris Energy

Very good diversification

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

Pair Corralation between FirstCash and Iris Energy

Given the investment horizon of 90 days FirstCash is expected to generate 0.19 times more return on investment than Iris Energy. However, FirstCash is 5.26 times less risky than Iris Energy. It trades about 0.18 of its potential returns per unit of risk. Iris Energy is currently generating about -0.08 per unit of risk. If you would invest  10,265  in FirstCash on December 22, 2024 and sell it today you would earn a total of  1,422  from holding FirstCash or generate 13.85% return on investment over 90 days.

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

FirstCash  vs.  Iris Energy

FirstCash

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FirstCash are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, FirstCash unveiled solid returns over the last few months and may actually be approaching a breakup point.

Iris Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iris Energy 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with FirstCash and Iris Energy

The main advantage of trading using opposite FirstCash and Iris Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstCash 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 FirstCash 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.