Correlation Between Icon Natural and New Perspective
Can any of the company-specific risk be diversified away by investing in both Icon Natural and New Perspective 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 New Perspective 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 New Perspective Fund, you can compare the effects of market volatilities on Icon Natural and New Perspective 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 New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and New Perspective.
Diversification Opportunities for Icon Natural and New Perspective
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and New is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective 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 New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Icon Natural i.e., Icon Natural and New Perspective go up and down completely randomly.
Pair Corralation between Icon Natural and New Perspective
Assuming the 90 days horizon Icon Natural is expected to generate 1.54 times less return on investment than New Perspective. In addition to that, Icon Natural is 1.34 times more volatile than New Perspective Fund. It trades about 0.04 of its total potential returns per unit of risk. New Perspective Fund is currently generating about 0.09 per unit of volatility. If you would invest 4,567 in New Perspective Fund on September 13, 2024 and sell it today you would earn a total of 1,915 from holding New Perspective Fund or generate 41.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Natural Resources vs. New Perspective Fund
Performance |
| Timeline |
| Icon Natural Resources |
| New Perspective |
Icon Natural and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and New Perspective
The main advantage of trading using opposite Icon Natural and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective'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 |
| New Perspective vs. Icon Natural Resources | New Perspective vs. Gamco Natural Resources | New Perspective vs. Gmo Resources | New Perspective vs. Alpsalerian Energy Infrastructure |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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