Correlation Between Icon Natural and Columbia Large
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Columbia Large 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 Columbia Large 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 Columbia Large Cap, you can compare the effects of market volatilities on Icon Natural and Columbia Large 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 Columbia Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Columbia Large.
Diversification Opportunities for Icon Natural and Columbia Large
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Icon and Columbia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Columbia Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Large Cap 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 Columbia Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Large Cap has no effect on the direction of Icon Natural i.e., Icon Natural and Columbia Large go up and down completely randomly.
Pair Corralation between Icon Natural and Columbia Large
Assuming the 90 days horizon Icon Natural Resources is expected to generate 0.54 times more return on investment than Columbia Large. However, Icon Natural Resources is 1.84 times less risky than Columbia Large. It trades about 0.14 of its potential returns per unit of risk. Columbia Large Cap is currently generating about -0.02 per unit of risk. If you would invest 1,769 in Icon Natural Resources on September 13, 2024 and sell it today you would earn a total of 36.00 from holding Icon Natural Resources or generate 2.04% 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. Columbia Large Cap
Performance |
| Timeline |
| Icon Natural Resources |
| Columbia Large Cap |
Icon Natural and Columbia Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Columbia Large
The main advantage of trading using opposite Icon Natural and Columbia Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Columbia Large 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 Columbia Large will offset losses from the drop in Columbia Large'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 |
| Columbia Large vs. Columbia Porate Income | Columbia Large vs. Columbia Ultra Short | Columbia Large vs. Columbia Treasury Index | Columbia Large vs. Multi Manager Directional Alternative |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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