Correlation Between Iris Energy and Cipher Mining

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

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

Diversification Opportunities for Iris Energy and Cipher Mining

0.68

Correlation Coefficient

Iris Energy  Cipher Mining

Poor diversification

The 3 months correlation between Iris and Cipher is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Iris Energy and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Mining 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 Cipher Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipher Mining has no effect on the direction of Iris Energy i.e., Iris Energy and Cipher Mining go up and down completely randomly.

Pair Corralation between Iris Energy and Cipher Mining

Given the investment horizon of 90 days Iris Energy is expected to generate 0.97 times more return on investment than Cipher Mining. However, Iris Energy is 1.03 times less risky than Cipher Mining. It trades about 0.09 of its potential returns per unit of risk. Cipher Mining is currently generating about 0.02 per unit of risk. If you would invest  1,041  in Iris Energy on November 19, 2024 and sell it today you would earn a total of  260.00  from holding Iris Energy or generate 24.98% return on investment over 90 days.

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

Iris Energy  vs.  Cipher Mining

Iris Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Iris Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Iris Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Cipher Mining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cipher Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Cipher Mining may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Iris Energy and Cipher Mining

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

The idea behind Iris Energy and Cipher Mining 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.