Correlation Between Marcus and IperionX Limited

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

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

Diversification Opportunities for Marcus and IperionX Limited

0.77

Correlation Coefficient

Marcus  IperionX Limited

Poor diversification

The 3 months correlation between Marcus and IperionX is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Marcus and IperionX Limited American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IperionX Limited American and Marcus 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 Marcus are associated (or correlated) with IperionX Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IperionX Limited American has no effect on the direction of Marcus i.e., Marcus and IperionX Limited go up and down completely randomly.

Pair Corralation between Marcus and IperionX Limited

Considering the 90-day investment horizon Marcus is expected to generate 0.45 times more return on investment than IperionX Limited. However, Marcus is 2.24 times less risky than IperionX Limited. It trades about -0.03 of its potential returns per unit of risk. IperionX Limited American is currently generating about -0.04 per unit of risk. If you would invest  2,175  in Marcus on September 22, 2024 and sell it today you would lose (28.00) from holding Marcus or give up 1.29% of portfolio value over 90 days.

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

Marcus  vs.  IperionX Limited American

Marcus

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marcus are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Marcus unveiled solid returns over the last few months and may actually be approaching a breakup point.

IperionX Limited American

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IperionX Limited American are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IperionX Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marcus and IperionX Limited

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

The idea behind Marcus and IperionX Limited American 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.