Correlation Between High Yield and Icon Financial

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Can any of the company-specific risk be diversified away by investing in both High Yield 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 High Yield and Icon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund R6 and Icon Financial Fund, you can compare the effects of market volatilities on High Yield 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 High Yield with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Icon Financial.

Diversification Opportunities for High Yield and Icon Financial

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between High and Icon is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund R6 and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and High Yield 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 High Yield Fund R6 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 High Yield i.e., High Yield and Icon Financial go up and down completely randomly.

Pair Corralation between High Yield and Icon Financial

Assuming the 90 days horizon High Yield Fund R6 is expected to generate 0.04 times more return on investment than Icon Financial. However, High Yield Fund R6 is 26.72 times less risky than Icon Financial. It trades about 0.15 of its potential returns per unit of risk. Icon Financial Fund is currently generating about -0.16 per unit of risk. If you would invest  511.00  in High Yield Fund R6 on September 13, 2024 and sell it today you would earn a total of  2.00  from holding High Yield Fund R6 or generate 0.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

High Yield Fund R6  vs.  Icon Financial Fund

 Performance 
       Timeline  
High Yield Fund 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in High Yield Fund R6 are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, High Yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Icon Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Icon Financial Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Icon Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

High Yield and Icon Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with High Yield and Icon Financial

The main advantage of trading using opposite High Yield and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield 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.
The idea behind High Yield Fund R6 and Icon Financial Fund 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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