Correlation Between Iridium Communications and BitFuFu Warrant

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

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

Diversification Opportunities for Iridium Communications and BitFuFu Warrant

-0.06

Correlation Coefficient

Iridium Communications  BitFuFu Warrant

Good diversification

The 3 months correlation between Iridium and BitFuFu is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and BitFuFu Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitFuFu Warrant and Iridium Communications 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 Iridium Communications are associated (or correlated) with BitFuFu Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitFuFu Warrant has no effect on the direction of Iridium Communications i.e., Iridium Communications and BitFuFu Warrant go up and down completely randomly.

Pair Corralation between Iridium Communications and BitFuFu Warrant

Given the investment horizon of 90 days Iridium Communications is expected to generate 35.78 times less return on investment than BitFuFu Warrant. But when comparing it to its historical volatility, Iridium Communications is 3.31 times less risky than BitFuFu Warrant. It trades about 0.0 of its potential returns per unit of risk. BitFuFu Warrant is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  44.00  in BitFuFu Warrant on December 4, 2024 and sell it today you would earn a total of  0.00  from holding BitFuFu Warrant or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Iridium Communications  vs.  BitFuFu Warrant

Iridium Communications

Risk-Adjusted Performance

Weak

Over the last 90 days Iridium Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Iridium Communications is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

BitFuFu Warrant

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BitFuFu Warrant are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BitFuFu Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iridium Communications and BitFuFu Warrant

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

The idea behind Iridium Communications and BitFuFu Warrant 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.