Correlation Between Stem and Ironnet

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

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

Diversification Opportunities for Stem and Ironnet

0.0

Correlation Coefficient

Stem  Ironnet

Pay attention - limited upside

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

Pair Corralation between Stem and Ironnet

If you would invest (100.00) in Ironnet on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Ironnet or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Stem Inc  vs.  Ironnet

Stem Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stem Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ironnet

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Stem and Ironnet

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

The idea behind Stem Inc and Ironnet 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.