Correlation Between California High-yield and Icon Financial
Can any of the company-specific risk be diversified away by investing in both California 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 California 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 California High Yield Municipal and Icon Financial Fund, you can compare the effects of market volatilities on California 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 California High-yield with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Icon Financial.
Diversification Opportunities for California High-yield and Icon Financial
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between California and Icon is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and California 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 California High Yield Municipal 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 California High-yield i.e., California High-yield and Icon Financial go up and down completely randomly.
Pair Corralation between California High-yield and Icon Financial
Assuming the 90 days horizon California High-yield is expected to generate 1.16 times less return on investment than Icon Financial. But when comparing it to its historical volatility, California High Yield Municipal is 4.01 times less risky than Icon Financial. It trades about 0.07 of its potential returns per unit of risk. Icon Financial Fund is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 921.00 in Icon Financial Fund on September 3, 2024 and sell it today you would earn a total of 83.00 from holding Icon Financial Fund or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Icon Financial Fund
Performance |
| Timeline |
| California High Yield |
| Icon Financial |
California High-yield and Icon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Icon Financial
The main advantage of trading using opposite California High-yield and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California 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.| California High-yield vs. Volumetric Fund Volumetric | California High-yield vs. Abr 7525 Volatility | California High-yield vs. Qs Large Cap | California High-yield vs. Ab Value Fund |
| Icon Financial vs. Nuveen Minnesota Municipal | Icon Financial vs. Ishares Municipal Bond | Icon Financial vs. Ab Impact Municipal | Icon Financial vs. California High Yield Municipal |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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