Correlation Between Icon Natural and Meridian Growth
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Meridian Growth 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 Meridian Growth 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 Meridian Growth Fund, you can compare the effects of market volatilities on Icon Natural and Meridian Growth 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 Meridian Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Meridian Growth.
Diversification Opportunities for Icon Natural and Meridian Growth
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Icon and Meridian is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Meridian Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Growth 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 Meridian Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Growth has no effect on the direction of Icon Natural i.e., Icon Natural and Meridian Growth go up and down completely randomly.
Pair Corralation between Icon Natural and Meridian Growth
Assuming the 90 days horizon Icon Natural is expected to generate 1.46 times less return on investment than Meridian Growth. In addition to that, Icon Natural is 1.2 times more volatile than Meridian Growth Fund. It trades about 0.04 of its total potential returns per unit of risk. Meridian Growth Fund is currently generating about 0.07 per unit of volatility. If you would invest 3,431 in Meridian Growth Fund on September 1, 2024 and sell it today you would earn a total of 441.00 from holding Meridian Growth Fund or generate 12.85% 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. Meridian Growth Fund
Performance |
| Timeline |
| Icon Natural Resources |
| Meridian Growth |
Icon Natural and Meridian Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Meridian Growth
The main advantage of trading using opposite Icon Natural and Meridian Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Meridian Growth 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 Meridian Growth will offset losses from the drop in Meridian Growth'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 |
| Meridian Growth vs. Meridian Equity Income | Meridian Growth vs. Meridian Equity Income | Meridian Growth vs. Meridian Growth Fund | Meridian Growth vs. Meridian Equity Income |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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