Correlation Between Iron Mountain and Coty

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

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

Diversification Opportunities for Iron Mountain and Coty

-0.62

Correlation Coefficient

Iron Mountain  Coty

Excellent diversification

The 3 months correlation between Iron and Coty is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc and Iron Mountain 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 Iron Mountain Incorporated are associated (or correlated) with Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of Iron Mountain i.e., Iron Mountain and Coty go up and down completely randomly.

Pair Corralation between Iron Mountain and Coty

Assuming the 90 days trading horizon Iron Mountain Incorporated is expected to generate 0.81 times more return on investment than Coty. However, Iron Mountain Incorporated is 1.24 times less risky than Coty. It trades about 0.05 of its potential returns per unit of risk. Coty Inc is currently generating about -0.04 per unit of risk. If you would invest  64,798  in Iron Mountain Incorporated on September 14, 2024 and sell it today you would earn a total of  2,958  from holding Iron Mountain Incorporated or generate 4.56% return on investment over 90 days.

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

Iron Mountain Incorporated  vs.  Coty Inc

Iron Mountain

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iron Mountain Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Iron Mountain is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Coty Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coty Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Iron Mountain and Coty

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

The idea behind Iron Mountain Incorporated and Coty Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.