Correlation Between Iris Energy and Bitfarms

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

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

Diversification Opportunities for Iris Energy and Bitfarms

0.79

Correlation Coefficient

Iris Energy  Bitfarms

Poor diversification

The 3 months correlation between Iris and Bitfarms is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Iris Energy and Bitfarms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitfarms and Iris Energy 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 Iris Energy are associated (or correlated) with Bitfarms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitfarms has no effect on the direction of Iris Energy i.e., Iris Energy and Bitfarms go up and down completely randomly.

Pair Corralation between Iris Energy and Bitfarms

Given the investment horizon of 90 days Iris Energy is expected to generate 1.38 times more return on investment than Bitfarms. However, Iris Energy is 1.38 times more volatile than Bitfarms. It trades about -0.09 of its potential returns per unit of risk. Bitfarms is currently generating about -0.14 per unit of risk. If you would invest  994.00  in Iris Energy on December 29, 2024 and sell it today you would lose (387.00) from holding Iris Energy or give up 38.93% of portfolio value over 90 days.

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

Iris Energy  vs.  Bitfarms

Iris Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iris Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Bitfarms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitfarms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Iris Energy and Bitfarms

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

The idea behind Iris Energy and Bitfarms 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.