Correlation Between Pets At and Iron Mountain

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

By analyzing existing cross correlation between Pets at Home and Iron Mountain, you can compare the effects of market volatilities on Pets At and Iron Mountain 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 Pets At with a short position of Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pets At and Iron Mountain.

Diversification Opportunities for Pets At and Iron Mountain

0.81

Correlation Coefficient

Pets At  Iron Mountain

Very poor diversification

The 3 months correlation between Pets and Iron is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pets at Home and Iron Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain and Pets At 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 Pets at Home are associated (or correlated) with Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Pets At i.e., Pets At and Iron Mountain go up and down completely randomly.

Pair Corralation between Pets At and Iron Mountain

Assuming the 90 days trading horizon Pets At is expected to generate 2.81 times less return on investment than Iron Mountain. In addition to that, Pets At is 1.18 times more volatile than Iron Mountain. It trades about 0.05 of its total potential returns per unit of risk. Iron Mountain is currently generating about 0.18 per unit of volatility. If you would invest  10,500  in Iron Mountain on October 24, 2024 and sell it today you would earn a total of  557.00  from holding Iron Mountain or generate 5.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Pets at Home  vs.  Iron Mountain

Pets at Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pets at Home 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.

Iron Mountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Mountain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Pets At and Iron Mountain

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

The idea behind Pets at Home and Iron Mountain 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.