Correlation Between Icon Natural and Columbia Small
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Columbia 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 Columbia 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 Columbia Small Cap, you can compare the effects of market volatilities on Icon Natural and Columbia 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 Columbia Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Columbia Small.
Diversification Opportunities for Icon Natural and Columbia Small
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Icon and Columbia is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Columbia Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia 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 Columbia Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Small Cap has no effect on the direction of Icon Natural i.e., Icon Natural and Columbia Small go up and down completely randomly.
Pair Corralation between Icon Natural and Columbia Small
Assuming the 90 days horizon Icon Natural is expected to generate 4.25 times less return on investment than Columbia Small. In addition to that, Icon Natural is 1.25 times more volatile than Columbia Small Cap. It trades about 0.05 of its total potential returns per unit of risk. Columbia Small Cap is currently generating about 0.29 per unit of volatility. If you would invest 2,487 in Columbia Small Cap on September 4, 2024 and sell it today you would earn a total of 255.00 from holding Columbia Small Cap or generate 10.25% 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. Columbia Small Cap
Performance |
| Timeline |
| Icon Natural Resources |
| Columbia Small Cap |
Icon Natural and Columbia Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Columbia Small
The main advantage of trading using opposite Icon Natural and Columbia Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Columbia 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 Columbia Small will offset losses from the drop in Columbia 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 |
| Columbia Small vs. Columbia Ultra Short | Columbia Small vs. Columbia Integrated Large | Columbia Small vs. Columbia Integrated Large | Columbia Small vs. Columbia Integrated Large |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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