Correlation Between Flexible Solutions and Iris Energy

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

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

Diversification Opportunities for Flexible Solutions and Iris Energy

0.1

Correlation Coefficient

Flexible Solutions  Iris Energy

Average diversification

The 3 months correlation between Flexible and Iris is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy and Flexible Solutions 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 Flexible Solutions International 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 Flexible Solutions i.e., Flexible Solutions and Iris Energy go up and down completely randomly.

Pair Corralation between Flexible Solutions and Iris Energy

Considering the 90-day investment horizon Flexible Solutions International is expected to generate 1.21 times more return on investment than Iris Energy. However, Flexible Solutions is 1.21 times more volatile than Iris Energy. It trades about 0.1 of its potential returns per unit of risk. Iris Energy is currently generating about -0.09 per unit of risk. If you would invest  361.00  in Flexible Solutions International on December 28, 2024 and sell it today you would earn a total of  133.00  from holding Flexible Solutions International or generate 36.84% return on investment over 90 days.

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

Flexible Solutions Internation  vs.  Iris Energy

Flexible Solutions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flexible Solutions International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Flexible Solutions demonstrated 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 weak 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 Flexible Solutions and Iris Energy

The main advantage of trading using opposite Flexible Solutions and Iris Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions 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 Flexible Solutions International 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.