Correlation Between Ironbark Capital and Garda Diversified

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

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

Diversification Opportunities for Ironbark Capital and Garda Diversified

0.39

Correlation Coefficient

Ironbark Capital  Garda Diversified

Weak diversification

The 3 months correlation between Ironbark and Garda is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ironbark Capital and Garda Diversified Ppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garda Diversified Ppty and Ironbark Capital 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 Ironbark Capital are associated (or correlated) with Garda Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garda Diversified Ppty has no effect on the direction of Ironbark Capital i.e., Ironbark Capital and Garda Diversified go up and down completely randomly.

Pair Corralation between Ironbark Capital and Garda Diversified

Assuming the 90 days trading horizon Ironbark Capital is expected to generate 0.74 times more return on investment than Garda Diversified. However, Ironbark Capital is 1.36 times less risky than Garda Diversified. It trades about 0.05 of its potential returns per unit of risk. Garda Diversified Ppty is currently generating about -0.02 per unit of risk. If you would invest  44.00  in Ironbark Capital on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Ironbark Capital or generate 2.27% return on investment over 90 days.

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

Ironbark Capital  vs.  Garda Diversified Ppty

Ironbark Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ironbark Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ironbark Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Garda Diversified Ppty

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ironbark Capital and Garda Diversified

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

The idea behind Ironbark Capital and Garda Diversified Ppty 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.