Correlation Between Solid Impact and Labrador Iron

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

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

Diversification Opportunities for Solid Impact and Labrador Iron

0.0

Correlation Coefficient

Solid Impact  Labrador Iron

Pay attention - limited upside

The 3 months correlation between Solid and Labrador is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Solid Impact Investments and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore and Solid Impact 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 Solid Impact Investments are associated (or correlated) with Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Solid Impact i.e., Solid Impact and Labrador Iron go up and down completely randomly.

Pair Corralation between Solid Impact and Labrador Iron

If you would invest  2,885  in Labrador Iron Ore on December 22, 2024 and sell it today you would earn a total of  131.00  from holding Labrador Iron Ore or generate 4.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Solid Impact Investments  vs.  Labrador Iron Ore

Solid Impact Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solid Impact Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Solid Impact is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Labrador Iron Ore

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Labrador Iron Ore are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Labrador Iron is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Solid Impact and Labrador Iron

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

The idea behind Solid Impact Investments and Labrador Iron Ore 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.