Correlation Between Iris Energy and Terawulf

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

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

Diversification Opportunities for Iris Energy and Terawulf

0.55

Correlation Coefficient

Iris Energy  Terawulf

Very weak diversification

The 3 months correlation between Iris and Terawulf is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Iris Energy and Terawulf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terawulf 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 Terawulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terawulf has no effect on the direction of Iris Energy i.e., Iris Energy and Terawulf go up and down completely randomly.

Pair Corralation between Iris Energy and Terawulf

Given the investment horizon of 90 days Iris Energy is expected to generate 0.87 times more return on investment than Terawulf. However, Iris Energy is 1.15 times less risky than Terawulf. It trades about -0.09 of its potential returns per unit of risk. Terawulf is currently generating about -0.1 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	Weak
Accuracy	100.0%
Values	Daily Returns

Iris Energy  vs.  Terawulf

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.

Terawulf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Terawulf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential 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 Terawulf

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

The idea behind Iris Energy and Terawulf 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.