Correlation Between Greenidge Generation and Iris Energy

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

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

Diversification Opportunities for Greenidge Generation and Iris Energy

0.27

Correlation Coefficient

Greenidge Generation  Iris Energy

Modest diversification

The 3 months correlation between Greenidge and Iris is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Greenidge Generation Holdings and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy and Greenidge Generation 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 Greenidge Generation Holdings 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 Greenidge Generation i.e., Greenidge Generation and Iris Energy go up and down completely randomly.

Pair Corralation between Greenidge Generation and Iris Energy

Given the investment horizon of 90 days Greenidge Generation Holdings is expected to under-perform the Iris Energy. But the stock apears to be less risky and, when comparing its historical volatility, Greenidge Generation Holdings is 1.15 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 0.07 of returns per unit of risk over similar time horizon. If you would invest  619.00  in Iris Energy on October 1, 2024 and sell it today you would earn a total of  452.00  from holding Iris Energy or generate 73.02% return on investment over 90 days.

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

Greenidge Generation Holdings  vs.  Iris Energy

Greenidge Generation

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greenidge Generation Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Greenidge Generation is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Greenidge Generation and Iris Energy

The main advantage of trading using opposite Greenidge Generation and Iris Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greenidge Generation 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 Greenidge Generation Holdings 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.