Correlation Between Heritage Fund and Icon Financial
Can any of the company-specific risk be diversified away by investing in both Heritage Fund 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 Heritage Fund and Icon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Fund A and Icon Financial Fund, you can compare the effects of market volatilities on Heritage Fund 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 Heritage Fund with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Fund and Icon Financial.
Diversification Opportunities for Heritage Fund and Icon Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heritage and Icon is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Fund A and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and Heritage Fund 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 Heritage Fund A 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 Heritage Fund i.e., Heritage Fund and Icon Financial go up and down completely randomly.
Pair Corralation between Heritage Fund and Icon Financial
Assuming the 90 days horizon Heritage Fund A is expected to generate 0.66 times more return on investment than Icon Financial. However, Heritage Fund A is 1.51 times less risky than Icon Financial. It trades about 0.16 of its potential returns per unit of risk. Icon Financial Fund is currently generating about -0.03 per unit of risk. If you would invest 1,990 in Heritage Fund A on September 1, 2024 and sell it today you would earn a total of 459.00 from holding Heritage Fund A or generate 23.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Heritage Fund A vs. Icon Financial Fund
Performance |
| Timeline |
| Heritage Fund A |
| Icon Financial |
Heritage Fund and Icon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Fund and Icon Financial
The main advantage of trading using opposite Heritage Fund and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Fund 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.| Heritage Fund vs. Growth Fund Investor | Heritage Fund vs. Select Fund Investor | Heritage Fund vs. Emerging Markets Fund | Heritage Fund vs. Ultra Fund Investor |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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