Correlation Between Icon Natural and Aqr Sustainable
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Aqr Sustainable 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 Aqr Sustainable 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 Aqr Sustainable Long Short, you can compare the effects of market volatilities on Icon Natural and Aqr Sustainable 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 Aqr Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Aqr Sustainable.
Diversification Opportunities for Icon Natural and Aqr Sustainable
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Icon and Aqr is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Aqr Sustainable Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Sustainable Long 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 Aqr Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Sustainable Long has no effect on the direction of Icon Natural i.e., Icon Natural and Aqr Sustainable go up and down completely randomly.
Pair Corralation between Icon Natural and Aqr Sustainable
Assuming the 90 days horizon Icon Natural is expected to generate 3.26 times less return on investment than Aqr Sustainable. But when comparing it to its historical volatility, Icon Natural Resources is 1.29 times less risky than Aqr Sustainable. It trades about 0.03 of its potential returns per unit of risk. Aqr Sustainable Long Short is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 911.00 in Aqr Sustainable Long Short on September 3, 2024 and sell it today you would earn a total of 592.00 from holding Aqr Sustainable Long Short or generate 64.98% 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. Aqr Sustainable Long Short
Performance |
| Timeline |
| Icon Natural Resources |
| Aqr Sustainable Long |
Icon Natural and Aqr Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Aqr Sustainable
The main advantage of trading using opposite Icon Natural and Aqr Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Aqr Sustainable 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 Aqr Sustainable will offset losses from the drop in Aqr Sustainable'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 |
| Aqr Sustainable vs. Franklin Natural Resources | Aqr Sustainable vs. Oil Gas Ultrasector | Aqr Sustainable vs. Firsthand Alternative Energy | Aqr Sustainable vs. Icon Natural Resources |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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