Correlation Between Bradda Head and Ioneer

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

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

Diversification Opportunities for Bradda Head and Ioneer

0.41

Correlation Coefficient

Bradda Head  Ioneer

Very weak diversification

The 3 months correlation between Bradda and Ioneer is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bradda Head Lithium and ioneer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ioneer and Bradda Head 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 Bradda Head Lithium 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 has no effect on the direction of Bradda Head i.e., Bradda Head and Ioneer go up and down completely randomly.

Pair Corralation between Bradda Head and Ioneer

Assuming the 90 days horizon Bradda Head Lithium is expected to under-perform the Ioneer. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bradda Head Lithium is 1.94 times less risky than Ioneer. The pink sheet trades about -0.06 of its potential returns per unit of risk. The ioneer is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  27.00  in ioneer on September 13, 2024 and sell it today you would lose (16.00) from holding ioneer or give up 59.26% of portfolio value over 90 days.

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

Bradda Head Lithium  vs.  ioneer

Bradda Head Lithium

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bradda Head Lithium are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Bradda Head may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ioneer

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ioneer are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Ioneer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bradda Head and Ioneer

The main advantage of trading using opposite Bradda Head and Ioneer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bradda Head 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 Bradda Head Lithium and ioneer 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.