Correlation Between Iron Road and Saferoads Holdings

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

By analyzing existing cross correlation between Iron Road and Saferoads Holdings, you can compare the effects of market volatilities on Iron Road and Saferoads Holdings 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 Saferoads Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and Saferoads Holdings.

Diversification Opportunities for Iron Road and Saferoads Holdings

0.0

Correlation Coefficient

Iron Road  Saferoads Holdings

Pay attention - limited upside

The 3 months correlation between Iron and Saferoads is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road and Saferoads Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saferoads Holdings 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 Saferoads Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saferoads Holdings has no effect on the direction of Iron Road i.e., Iron Road and Saferoads Holdings go up and down completely randomly.

Pair Corralation between Iron Road and Saferoads Holdings

Assuming the 90 days trading horizon Iron Road is expected to generate 1.67 times more return on investment than Saferoads Holdings. However, Iron Road is 1.67 times more volatile than Saferoads Holdings. It trades about -0.03 of its potential returns per unit of risk. Saferoads Holdings is currently generating about -0.08 per unit of risk. If you would invest  13.00  in Iron Road on September 20, 2024 and sell it today you would lose (7.40) from holding Iron Road or give up 56.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Iron Road  vs.  Saferoads Holdings

Iron Road

Risk-Adjusted Performance

0 of 100

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.

Saferoads Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saferoads Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Saferoads Holdings 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 Iron Road and Saferoads Holdings

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

The idea behind Iron Road and Saferoads Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.