Correlation Between IperionX Limited and Marcus

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

By analyzing existing cross correlation between IperionX Limited American and Marcus, you can compare the effects of market volatilities on IperionX Limited and Marcus 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 IperionX Limited with a short position of Marcus. Check out your portfolio center. Please also check ongoing floating volatility patterns of IperionX Limited and Marcus.

Diversification Opportunities for IperionX Limited and Marcus

0.77

Correlation Coefficient

IperionX Limited  Marcus

Poor diversification

The 3 months correlation between IperionX and Marcus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding IperionX Limited American and Marcus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus and IperionX Limited 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 IperionX Limited American are associated (or correlated) with Marcus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus has no effect on the direction of IperionX Limited i.e., IperionX Limited and Marcus go up and down completely randomly.

Pair Corralation between IperionX Limited and Marcus

Considering the 90-day investment horizon IperionX Limited American is expected to under-perform the Marcus. In addition to that, IperionX Limited is 2.24 times more volatile than Marcus. It trades about -0.04 of its total potential returns per unit of risk. Marcus is currently generating about -0.03 per unit of volatility. If you would invest  2,175  in Marcus on September 22, 2024 and sell it today you would lose (28.00) from holding Marcus or give up 1.29% of portfolio value over 90 days.

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

IperionX Limited American  vs.  Marcus

IperionX Limited American

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IperionX Limited American are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IperionX Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Marcus

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marcus are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Marcus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IperionX Limited and Marcus

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

The idea behind IperionX Limited American and Marcus 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.