Correlation Between Premium Income and IDEX Metals

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

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

Diversification Opportunities for Premium Income and IDEX Metals

0.1

Correlation Coefficient

Premium Income  IDEX Metals

Average diversification

The 3 months correlation between Premium and IDEX is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Premium Income and IDEX Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX Metals Corp and Premium Income 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 Premium Income are associated (or correlated) with IDEX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX Metals Corp has no effect on the direction of Premium Income i.e., Premium Income and IDEX Metals go up and down completely randomly.

Pair Corralation between Premium Income and IDEX Metals

Assuming the 90 days trading horizon Premium Income is expected to generate 0.42 times more return on investment than IDEX Metals. However, Premium Income is 2.39 times less risky than IDEX Metals. It trades about 0.43 of its potential returns per unit of risk. IDEX Metals Corp is currently generating about -0.05 per unit of risk. If you would invest  459.00  in Premium Income on April 23, 2025 and sell it today you would earn a total of  194.00  from holding Premium Income or generate 42.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	48.39%
Values	Daily Returns

Premium Income  vs.  IDEX Metals Corp

Premium Income

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Premium Income are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Premium Income unveiled solid returns over the last few months and may actually be approaching a breakup point.

IDEX Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDEX Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Premium Income and IDEX Metals

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

The idea behind Premium Income and IDEX Metals 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 Stocks Directory module to find actively traded stocks across global markets.