Correlation Between Iris Energy and Stronghold Digital

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

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

Diversification Opportunities for Iris Energy and Stronghold Digital

0.59

Correlation Coefficient

Iris Energy  Stronghold Digital

Very weak diversification

The 3 months correlation between Iris and Stronghold is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Iris Energy and Stronghold Digital Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stronghold Digital 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 Stronghold Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stronghold Digital Mining has no effect on the direction of Iris Energy i.e., Iris Energy and Stronghold Digital go up and down completely randomly.

Pair Corralation between Iris Energy and Stronghold Digital

Given the investment horizon of 90 days Iris Energy is expected to under-perform the Stronghold Digital. In addition to that, Iris Energy is 1.32 times more volatile than Stronghold Digital Mining. It trades about -0.09 of its total potential returns per unit of risk. Stronghold Digital Mining is currently generating about -0.08 per unit of volatility. If you would invest  368.00  in Stronghold Digital Mining on December 29, 2024 and sell it today you would lose (87.00) from holding Stronghold Digital Mining or give up 23.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.25%
Values	Daily Returns

Iris Energy  vs.  Stronghold Digital Mining

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 fragile 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.

Stronghold Digital Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stronghold Digital Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward 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 Stronghold Digital

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

The idea behind Iris Energy and Stronghold Digital 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..