Correlation Between Materion and IperionX Limited

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

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

Diversification Opportunities for Materion and IperionX Limited

-0.14

Correlation Coefficient

Materion  IperionX Limited

Good diversification

The 3 months correlation between Materion and IperionX is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Materion and IperionX Limited American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IperionX Limited American and Materion 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 Materion are associated (or correlated) with IperionX Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IperionX Limited American has no effect on the direction of Materion i.e., Materion and IperionX Limited go up and down completely randomly.

Pair Corralation between Materion and IperionX Limited

Given the investment horizon of 90 days Materion is expected to under-perform the IperionX Limited. But the stock apears to be less risky and, when comparing its historical volatility, Materion is 1.6 times less risky than IperionX Limited. The stock trades about -0.07 of its potential returns per unit of risk. The IperionX Limited American is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,536  in IperionX Limited American on June 21, 2024 and sell it today you would earn a total of  274.00  from holding IperionX Limited American or generate 17.84% return on investment over 90 days.

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

Materion  vs.  IperionX Limited American

Materion

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Materion are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Materion is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

IperionX Limited American

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IperionX Limited American are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IperionX Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Materion and IperionX Limited

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

The idea behind Materion and IperionX Limited American 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.