Correlation Between Icon Natural and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Ishares Municipal 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 Ishares Municipal 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 Ishares Municipal Bond, you can compare the effects of market volatilities on Icon Natural and Ishares Municipal 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 Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Ishares Municipal.
Diversification Opportunities for Icon Natural and Ishares Municipal
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Icon and IShares is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond 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 Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Icon Natural i.e., Icon Natural and Ishares Municipal go up and down completely randomly.
Pair Corralation between Icon Natural and Ishares Municipal
Assuming the 90 days horizon Icon Natural is expected to generate 1.03 times less return on investment than Ishares Municipal. In addition to that, Icon Natural is 6.68 times more volatile than Ishares Municipal Bond. It trades about 0.03 of its total potential returns per unit of risk. Ishares Municipal Bond is currently generating about 0.21 per unit of volatility. If you would invest 1,104 in Ishares Municipal Bond on September 5, 2024 and sell it today you would earn a total of 15.00 from holding Ishares Municipal Bond or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Icon Natural Resources vs. Ishares Municipal Bond
Performance |
| Timeline |
| Icon Natural Resources |
| Ishares Municipal Bond |
Icon Natural and Ishares Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Ishares Municipal
The main advantage of trading using opposite Icon Natural and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Ishares Municipal 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 Ishares Municipal will offset losses from the drop in Ishares Municipal'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 |
| Ishares Municipal vs. Energy Basic Materials | Ishares Municipal vs. Icon Natural Resources | Ishares Municipal vs. Adams Natural Resources | Ishares Municipal vs. Hennessy Bp Energy |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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