Correlation Between Iron Mountain and Nordstrom

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

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

Diversification Opportunities for Iron Mountain and Nordstrom

0.67

Correlation Coefficient

Iron Mountain  Nordstrom

Poor diversification

The 3 months correlation between Iron and Nordstrom is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated and Nordstrom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordstrom and Iron Mountain 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 Iron Mountain Incorporated are associated (or correlated) with Nordstrom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordstrom has no effect on the direction of Iron Mountain i.e., Iron Mountain and Nordstrom go up and down completely randomly.

Pair Corralation between Iron Mountain and Nordstrom

Assuming the 90 days trading horizon Iron Mountain Incorporated is expected to under-perform the Nordstrom. In addition to that, Iron Mountain is 4.72 times more volatile than Nordstrom. It trades about -0.16 of its total potential returns per unit of risk. Nordstrom is currently generating about -0.13 per unit of volatility. If you would invest  14,028  in Nordstrom on September 27, 2024 and sell it today you would lose (167.00) from holding Nordstrom or give up 1.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Iron Mountain Incorporated  vs.  Nordstrom

Iron Mountain

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Iron Mountain Incorporated are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Iron Mountain is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nordstrom

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordstrom are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nordstrom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Iron Mountain and Nordstrom

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

The idea behind Iron Mountain Incorporated and Nordstrom 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.