Correlation Between Future Metals and IperionX Limited

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

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

Diversification Opportunities for Future Metals and IperionX Limited

0.76

Correlation Coefficient

Future Metals  IperionX Limited

Poor diversification

The 3 months correlation between Future and IperionX is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL 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 Future Metals 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 Future Metals NL 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 Future Metals i.e., Future Metals and IperionX Limited go up and down completely randomly.

Pair Corralation between Future Metals and IperionX Limited

Assuming the 90 days trading horizon Future Metals NL is expected to generate 2.11 times more return on investment than IperionX Limited. However, Future Metals is 2.11 times more volatile than IperionX Limited American. It trades about 0.1 of its potential returns per unit of risk. IperionX Limited American is currently generating about 0.0 per unit of risk. If you would invest  83.00  in Future Metals NL on August 11, 2025 and sell it today you would earn a total of  27.00  from holding Future Metals NL or generate 32.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.38%
Values	Daily Returns

Future Metals NL  vs.  IperionX Limited American

Future Metals NL

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Future Metals NL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Future Metals exhibited solid returns over the last few months and may actually be approaching a breakup point.

IperionX Limited American

Risk-Adjusted Performance

Weakest

Over the last 90 days IperionX Limited American has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, IperionX Limited is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Future Metals and IperionX Limited

The main advantage of trading using opposite Future Metals and IperionX Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Metals 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 Future Metals NL 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.