Correlation Between Kip McGrath and Iluka Resources

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

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

Diversification Opportunities for Kip McGrath and Iluka Resources

-0.68

Correlation Coefficient

Kip McGrath  Iluka Resources

Excellent diversification

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

Pair Corralation between Kip McGrath and Iluka Resources

Assuming the 90 days trading horizon Kip McGrath Education is expected to generate 1.73 times more return on investment than Iluka Resources. However, Kip McGrath is 1.73 times more volatile than Iluka Resources. It trades about -0.01 of its potential returns per unit of risk. Iluka Resources is currently generating about -0.05 per unit of risk. If you would invest  77.00  in Kip McGrath Education on October 4, 2024 and sell it today you would lose (30.00) from holding Kip McGrath Education or give up 38.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Kip McGrath Education  vs.  Iluka Resources

Kip McGrath Education

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kip McGrath Education are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Kip McGrath may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Iluka Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iluka Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Kip McGrath and Iluka Resources

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

The idea behind Kip McGrath Education and Iluka Resources 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.