Correlation Between Iris Energy and TLGY Acquisition

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

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

Diversification Opportunities for Iris Energy and TLGY Acquisition

0.81

Correlation Coefficient

Iris Energy  TLGY Acquisition

Very poor diversification

The 3 months correlation between Iris and TLGY is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Iris Energy and TLGY Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TLGY Acquisition Corp and Iris Energy 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 Iris Energy are associated (or correlated) with TLGY Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TLGY Acquisition Corp has no effect on the direction of Iris Energy i.e., Iris Energy and TLGY Acquisition go up and down completely randomly.

Pair Corralation between Iris Energy and TLGY Acquisition

Given the investment horizon of 90 days Iris Energy is expected to generate 102.48 times more return on investment than TLGY Acquisition. However, Iris Energy is 102.48 times more volatile than TLGY Acquisition Corp. It trades about 0.21 of its potential returns per unit of risk. TLGY Acquisition Corp is currently generating about 0.2 per unit of risk. If you would invest  1,025  in Iris Energy on September 18, 2024 and sell it today you would earn a total of  366.00  from holding Iris Energy or generate 35.71% return on investment over 90 days.

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

Iris Energy  vs.  TLGY Acquisition Corp

Iris Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iris Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Iris Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

TLGY Acquisition Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TLGY Acquisition Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, TLGY Acquisition is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Iris Energy and TLGY Acquisition

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

The idea behind Iris Energy and TLGY Acquisition Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.