Correlation Between Ironbark Capital and Premier Investments

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

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

Diversification Opportunities for Ironbark Capital and Premier Investments

0.03

Correlation Coefficient

Ironbark Capital  Premier Investments

Significant diversification

The 3 months correlation between Ironbark and Premier is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ironbark Capital and Premier Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Investments 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 Premier Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Investments has no effect on the direction of Ironbark Capital i.e., Ironbark Capital and Premier Investments go up and down completely randomly.

Pair Corralation between Ironbark Capital and Premier Investments

Assuming the 90 days trading horizon Ironbark Capital is expected to generate 0.4 times more return on investment than Premier Investments. However, Ironbark Capital is 2.47 times less risky than Premier Investments. It trades about 0.24 of its potential returns per unit of risk. Premier Investments is currently generating about -0.33 per unit of risk. If you would invest  46.00  in Ironbark Capital on October 9, 2024 and sell it today you would earn a total of  1.00  from holding Ironbark Capital or generate 2.17% return on investment over 90 days.

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

Ironbark Capital  vs.  Premier Investments

Ironbark Capital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ironbark Capital are ranked lower than 4 (%) 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.

Premier Investments

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Premier Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ironbark Capital and Premier Investments

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

The idea behind Ironbark Capital and Premier Investments 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.