Correlation Between Ironbark Capital and Perpetual Credit

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

By analyzing existing cross correlation between Ironbark Capital and Perpetual Credit Income, you can compare the effects of market volatilities on Ironbark Capital and Perpetual Credit 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 Perpetual Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ironbark Capital and Perpetual Credit.

Diversification Opportunities for Ironbark Capital and Perpetual Credit

0.37

Correlation Coefficient

Ironbark Capital  Perpetual Credit

Weak diversification

The 3 months correlation between Ironbark and Perpetual is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ironbark Capital and Perpetual Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perpetual Credit Income 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 Perpetual Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perpetual Credit Income has no effect on the direction of Ironbark Capital i.e., Ironbark Capital and Perpetual Credit go up and down completely randomly.

Pair Corralation between Ironbark Capital and Perpetual Credit

Assuming the 90 days trading horizon Ironbark Capital is expected to generate 16.82 times less return on investment than Perpetual Credit. In addition to that, Ironbark Capital is 1.12 times more volatile than Perpetual Credit Income. It trades about 0.01 of its total potential returns per unit of risk. Perpetual Credit Income is currently generating about 0.09 per unit of volatility. If you would invest  110.00  in Perpetual Credit Income on September 1, 2024 and sell it today you would earn a total of  6.00  from holding Perpetual Credit Income or generate 5.45% 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.  Perpetual Credit Income

Ironbark Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ironbark Capital has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Perpetual Credit Income

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perpetual Credit Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Perpetual Credit 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 Perpetual Credit

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

The idea behind Ironbark Capital and Perpetual Credit Income 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 Global Correlations module to find global opportunities by holding instruments from different markets.