Correlation Between Sandon Capital and Iron Road

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

By analyzing existing cross correlation between Sandon Capital Investments and Iron Road, you can compare the effects of market volatilities on Sandon Capital and Iron Road 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 Sandon Capital with a short position of Iron Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandon Capital and Iron Road.

Diversification Opportunities for Sandon Capital and Iron Road

0.2

Correlation Coefficient

Sandon Capital  Iron Road

Modest diversification

The 3 months correlation between Sandon and Iron is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sandon Capital Investments and Iron Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Road and Sandon Capital 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 Sandon Capital Investments are associated (or correlated) with Iron Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Road has no effect on the direction of Sandon Capital i.e., Sandon Capital and Iron Road go up and down completely randomly.

Pair Corralation between Sandon Capital and Iron Road

Assuming the 90 days trading horizon Sandon Capital Investments is expected to generate 0.94 times more return on investment than Iron Road. However, Sandon Capital Investments is 1.06 times less risky than Iron Road. It trades about 0.01 of its potential returns per unit of risk. Iron Road is currently generating about -0.03 per unit of risk. If you would invest  77.00  in Sandon Capital Investments on September 28, 2024 and sell it today you would earn a total of  0.00  from holding Sandon Capital Investments or generate 0.0% return on investment over 90 days.

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

Sandon Capital Investments  vs.  Iron Road

Sandon Capital Inves

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandon Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Sandon Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Iron Road

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Road 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 fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sandon Capital and Iron Road

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

The idea behind Sandon Capital Investments and Iron Road 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.