Correlation Between Iron Road and Argosy Minerals

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Can any of the company-specific risk be diversified away by investing in both Iron Road and Argosy Minerals 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 Road and Argosy Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Road and Argosy Minerals, you can compare the effects of market volatilities on Iron Road and Argosy Minerals 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 Road with a short position of Argosy Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and Argosy Minerals.

Diversification Opportunities for Iron Road and Argosy Minerals

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Iron and Argosy is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road and Argosy Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argosy Minerals and Iron Road 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 Road are associated (or correlated) with Argosy Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argosy Minerals has no effect on the direction of Iron Road i.e., Iron Road and Argosy Minerals go up and down completely randomly.

Pair Corralation between Iron Road and Argosy Minerals

Assuming the 90 days trading horizon Iron Road is expected to generate 0.63 times more return on investment than Argosy Minerals. However, Iron Road is 1.59 times less risky than Argosy Minerals. It trades about -0.01 of its potential returns per unit of risk. Argosy Minerals is currently generating about -0.08 per unit of risk. If you would invest  11.00  in Iron Road on September 30, 2024 and sell it today you would lose (5.00) from holding Iron Road or give up 45.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Iron Road  vs.  Argosy Minerals

 Performance 
       Timeline  
Iron Road 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Iron Road has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Argosy Minerals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Argosy Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Iron Road and Argosy Minerals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Iron Road and Argosy Minerals

The main advantage of trading using opposite Iron Road and Argosy Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, Argosy Minerals 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 Argosy Minerals will offset losses from the drop in Argosy Minerals' long position.
The idea behind Iron Road and Argosy Minerals 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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