Correlation Between Balanced Fund and Icon Equity
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Icon Equity 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 Balanced Fund and Icon Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Retail and Icon Equity Income, you can compare the effects of market volatilities on Balanced Fund and Icon Equity 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 Balanced Fund with a short position of Icon Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Icon Equity.
Diversification Opportunities for Balanced Fund and Icon Equity
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Balanced and Icon is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Icon Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Equity Income and Balanced 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 Balanced Fund Retail are associated (or correlated) with Icon Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Equity Income has no effect on the direction of Balanced Fund i.e., Balanced Fund and Icon Equity go up and down completely randomly.
Pair Corralation between Balanced Fund and Icon Equity
Assuming the 90 days horizon Balanced Fund Retail is expected to generate 0.84 times more return on investment than Icon Equity. However, Balanced Fund Retail is 1.19 times less risky than Icon Equity. It trades about 0.09 of its potential returns per unit of risk. Icon Equity Income is currently generating about 0.05 per unit of risk. If you would invest 1,138 in Balanced Fund Retail on September 3, 2024 and sell it today you would earn a total of 307.00 from holding Balanced Fund Retail or generate 26.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Retail vs. Icon Equity Income
Performance |
| Timeline |
| Balanced Fund Retail |
| Icon Equity Income |
Balanced Fund and Icon Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Icon Equity
The main advantage of trading using opposite Balanced Fund and Icon Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Icon Equity 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 Equity will offset losses from the drop in Icon Equity's long position.| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
| Icon Equity vs. Icon Equity Income | Icon Equity vs. American Beacon Balanced | Icon Equity vs. Lord Abbett Value | Icon Equity vs. Victory Floating Rate |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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