Correlation Between Carlton Investments and Ironbark Capital

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

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

Diversification Opportunities for Carlton Investments and Ironbark Capital

-0.17

Correlation Coefficient

Carlton Investments  Ironbark Capital

Good diversification

The 3 months correlation between Carlton and Ironbark is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Carlton Investments and Ironbark Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironbark Capital and Carlton Investments 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 Carlton Investments are associated (or correlated) with Ironbark Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ironbark Capital has no effect on the direction of Carlton Investments i.e., Carlton Investments and Ironbark Capital go up and down completely randomly.

Pair Corralation between Carlton Investments and Ironbark Capital

Assuming the 90 days trading horizon Carlton Investments is expected to generate 2.11 times less return on investment than Ironbark Capital. But when comparing it to its historical volatility, Carlton Investments is 1.42 times less risky than Ironbark Capital. It trades about 0.03 of its potential returns per unit of risk. Ironbark Capital is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Ironbark Capital on September 22, 2024 and sell it today you would earn a total of  3.00  from holding Ironbark Capital or generate 6.98% return on investment over 90 days.

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

Carlton Investments  vs.  Ironbark Capital

Carlton Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carlton Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ironbark Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ironbark Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ironbark Capital 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 Carlton Investments and Ironbark Capital

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

The idea behind Carlton Investments and Ironbark Capital 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.