Correlation Between Iron Mountain and Newlake Capital

Can any of the company-specific risk be diversified away by investing in both Iron Mountain and Newlake 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 Iron Mountain and Newlake Capital 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 Newlake Capital Partners, you can compare the effects of market volatilities on Iron Mountain and Newlake 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 Iron Mountain with a short position of Newlake Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Mountain and Newlake Capital.

Diversification Opportunities for Iron Mountain and Newlake Capital

0.25

Correlation Coefficient

Iron Mountain  Newlake Capital

Modest diversification

The 3 months correlation between Iron and Newlake is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated and Newlake Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newlake Capital Partners 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 Newlake Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newlake Capital Partners has no effect on the direction of Iron Mountain i.e., Iron Mountain and Newlake Capital go up and down completely randomly.

Pair Corralation between Iron Mountain and Newlake Capital

Considering the 90-day investment horizon Iron Mountain Incorporated is expected to generate 1.39 times more return on investment than Newlake Capital. However, Iron Mountain is 1.39 times more volatile than Newlake Capital Partners. It trades about -0.08 of its potential returns per unit of risk. Newlake Capital Partners is currently generating about -0.13 per unit of risk. If you would invest  11,841  in Iron Mountain Incorporated on September 24, 2024 and sell it today you would lose (1,319) from holding Iron Mountain Incorporated or give up 11.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Iron Mountain Incorporated  vs.  Newlake Capital Partners

Iron Mountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Mountain Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Newlake Capital Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newlake Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Iron Mountain and Newlake Capital

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

The idea behind Iron Mountain Incorporated and Newlake Capital Partners 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.