Correlation Between Icon Natural and American Century
Can any of the company-specific risk be diversified away by investing in both Icon Natural and American Century 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 Icon Natural and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Natural Resources and American Century Ultra, you can compare the effects of market volatilities on Icon Natural and American Century 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 Icon Natural with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and American Century.
Diversification Opportunities for Icon Natural and American Century
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Icon and American is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and American Century Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Ultra and Icon Natural 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 Icon Natural Resources are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Ultra has no effect on the direction of Icon Natural i.e., Icon Natural and American Century go up and down completely randomly.
Pair Corralation between Icon Natural and American Century
Assuming the 90 days horizon Icon Natural is expected to generate 2.72 times less return on investment than American Century. But when comparing it to its historical volatility, Icon Natural Resources is 1.0 times less risky than American Century. It trades about 0.03 of its potential returns per unit of risk. American Century Ultra is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,841 in American Century Ultra on September 2, 2024 and sell it today you would earn a total of 3,902 from holding American Century Ultra or generate 57.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Natural Resources vs. American Century Ultra
Performance |
| Timeline |
| Icon Natural Resources |
| American Century Ultra |
Icon Natural and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and American Century
The main advantage of trading using opposite Icon Natural and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Icon Natural vs. Icon Financial Fund | Icon Natural vs. Dreyfus Natural Resources | Icon Natural vs. Icon Natural Resources | Icon Natural vs. Icon Information Technology |
| American Century vs. Jpmorgan Equity Income | American Century vs. Small Cap Equity | American Century vs. Balanced Fund Retail | American Century vs. Calamos Global Equity |
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.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Stocks Directory Find actively traded stocks across global markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |