Correlation Between Small Cap and Icon Financial
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Icon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Growth and Icon Financial Fund, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Icon Financial.
Diversification Opportunities for Small Cap and Icon Financial
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Icon is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Growth and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and Small Cap 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 Small Cap Growth 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 Small Cap i.e., Small Cap and Icon Financial go up and down completely randomly.
Pair Corralation between Small Cap and Icon Financial
Assuming the 90 days horizon Small Cap Growth is expected to generate 1.22 times more return on investment than Icon Financial. However, Small Cap is 1.22 times more volatile than Icon Financial Fund. It trades about 0.08 of its potential returns per unit of risk. Icon Financial Fund is currently generating about 0.05 per unit of risk. If you would invest 1,825 in Small Cap Growth on August 30, 2024 and sell it today you would earn a total of 660.00 from holding Small Cap Growth or generate 36.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Growth vs. Icon Financial Fund
Performance |
| Timeline |
| Small Cap Growth |
| Icon Financial |
Small Cap and Icon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Icon Financial
The main advantage of trading using opposite Small Cap and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Nebraska Municipal Fund | Small Cap vs. Oklahoma Municipal Fund | Small Cap vs. Nuveen Massachusetts Municipal | Small Cap vs. Intermediate Term Tax Free Bond |
| Icon Financial vs. HUMANA INC | Icon Financial vs. Aquagold International | Icon Financial vs. Barloworld Ltd ADR | Icon Financial vs. Morningstar Unconstrained Allocation |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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