Correlation Between Icon Natural and The Hartford
Can any of the company-specific risk be diversified away by investing in both Icon Natural and The Hartford 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 The Hartford 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 The Hartford Small, you can compare the effects of market volatilities on Icon Natural and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and The Hartford.
Diversification Opportunities for Icon Natural and The Hartford
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Icon and The is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small has no effect on the direction of Icon Natural i.e., Icon Natural and The Hartford go up and down completely randomly.
Pair Corralation between Icon Natural and The Hartford
Assuming the 90 days horizon Icon Natural Resources is expected to generate 0.96 times more return on investment than The Hartford. However, Icon Natural Resources is 1.04 times less risky than The Hartford. It trades about 0.3 of its potential returns per unit of risk. The Hartford Small is currently generating about 0.22 per unit of risk. If you would invest 1,808 in Icon Natural Resources on August 30, 2024 and sell it today you would earn a total of 171.00 from holding Icon Natural Resources or generate 9.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Natural Resources vs. The Hartford Small
Performance |
| Timeline |
| Icon Natural Resources |
| Hartford Small |
Icon Natural and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and The Hartford
The main advantage of trading using opposite Icon Natural and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.The idea behind Icon Natural Resources and The Hartford Small pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| The Hartford vs. T Rowe Price | The Hartford vs. Dodge Cox Stock | The Hartford vs. Pace Large Growth | The Hartford vs. Upright Assets Allocation |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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