Correlation Between CARRIER and Ioneer

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

By analyzing existing cross correlation between CARRIER GLOBAL P and ioneer Ltd American, you can compare the effects of market volatilities on CARRIER and Ioneer 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 CARRIER with a short position of Ioneer. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARRIER and Ioneer.

Diversification Opportunities for CARRIER and Ioneer

-0.2

Correlation Coefficient

CARRIER  Ioneer

Good diversification

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

Pair Corralation between CARRIER and Ioneer

Assuming the 90 days trading horizon CARRIER GLOBAL P is expected to under-perform the Ioneer. But the bond apears to be less risky and, when comparing its historical volatility, CARRIER GLOBAL P is 7.5 times less risky than Ioneer. The bond trades about -0.02 of its potential returns per unit of risk. The ioneer Ltd American is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  396.00  in ioneer Ltd American on December 23, 2024 and sell it today you would earn a total of  23.00  from holding ioneer Ltd American or generate 5.81% return on investment over 90 days.

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

CARRIER GLOBAL P  vs.  ioneer Ltd American

CARRIER GLOBAL P

Risk-Adjusted Performance

Very Weak

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

ioneer American

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ioneer Ltd American are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Ioneer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CARRIER and Ioneer

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

The idea behind CARRIER GLOBAL P and ioneer Ltd 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.