Correlation Between Icon Natural and Nationwide Small
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Nationwide Small 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 Nationwide Small 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 Nationwide Small Cap, you can compare the effects of market volatilities on Icon Natural and Nationwide Small 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 Nationwide Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Nationwide Small.
Diversification Opportunities for Icon Natural and Nationwide Small
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Icon and Nationwide is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Nationwide Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Small 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 Nationwide Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Small Cap has no effect on the direction of Icon Natural i.e., Icon Natural and Nationwide Small go up and down completely randomly.
Pair Corralation between Icon Natural and Nationwide Small
Assuming the 90 days horizon Icon Natural is expected to generate 4.28 times less return on investment than Nationwide Small. In addition to that, Icon Natural is 1.24 times more volatile than Nationwide Small Cap. It trades about 0.05 of its total potential returns per unit of risk. Nationwide Small Cap is currently generating about 0.29 per unit of volatility. If you would invest 1,263 in Nationwide Small Cap on September 4, 2024 and sell it today you would earn a total of 124.00 from holding Nationwide Small Cap or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Icon Natural Resources vs. Nationwide Small Cap
Performance |
| Timeline |
| Icon Natural Resources |
| Nationwide Small Cap |
Icon Natural and Nationwide Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Nationwide Small
The main advantage of trading using opposite Icon Natural and Nationwide Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Nationwide Small 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 Nationwide Small will offset losses from the drop in Nationwide Small'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 |
| Nationwide Small vs. Rbc Emerging Markets | Nationwide Small vs. Morgan Stanley Emerging | Nationwide Small vs. Artisan Emerging Markets | Nationwide Small vs. Calamos Market Neutral |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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