Correlation Between Icon Natural and Icon Financial
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Icon Financial 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 Icon Natural and Icon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Natural Resources and Icon Financial Fund, you can compare the effects of market volatilities on Icon Natural and Icon Financial 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 Icon Natural with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Icon Financial.
Diversification Opportunities for Icon Natural and Icon Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Icon and Icon is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and Icon Natural 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 Icon Natural Resources are associated (or correlated) with Icon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Financial has no effect on the direction of Icon Natural i.e., Icon Natural and Icon Financial go up and down completely randomly.
Pair Corralation between Icon Natural and Icon Financial
Assuming the 90 days horizon Icon Natural is expected to generate 1.43 times less return on investment than Icon Financial. In addition to that, Icon Natural is 1.38 times more volatile than Icon Financial Fund. It trades about 0.05 of its total potential returns per unit of risk. Icon Financial Fund is currently generating about 0.1 per unit of volatility. If you would invest 1,074 in Icon Financial Fund on July 1, 2024 and sell it today you would earn a total of 16.00 from holding Icon Financial Fund or generate 1.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Icon Natural Resources vs. Icon Financial Fund
Performance |
Timeline |
Icon Natural Resources |
Icon Financial |
Icon Natural and Icon Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Icon Natural and Icon Financial
The main advantage of trading using opposite Icon Natural and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Icon Financial 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 Icon Financial will offset losses from the drop in Icon Financial's long position.Icon Natural vs. Icon Financial Fund | Icon Natural vs. Huber Capital Small | Icon Natural vs. Aquagold International | Icon Natural vs. Morningstar Unconstrained Allocation |
Icon Financial vs. Icon Bond Fund | Icon Financial vs. Icon Bond Fund | Icon Financial vs. Icon Equity Income | Icon Financial vs. Icon Longshort Fund |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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