Correlation Between Icon Natural and Energy Services
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Energy Services 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 Energy Services 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 Energy Services Fund, you can compare the effects of market volatilities on Icon Natural and Energy Services 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 Energy Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Energy Services.
Diversification Opportunities for Icon Natural and Energy Services
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and ENERGY is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Energy Services Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Services 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 Energy Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Services has no effect on the direction of Icon Natural i.e., Icon Natural and Energy Services go up and down completely randomly.
Pair Corralation between Icon Natural and Energy Services
Assuming the 90 days horizon Icon Natural Resources is expected to generate 0.67 times more return on investment than Energy Services. However, Icon Natural Resources is 1.48 times less risky than Energy Services. It trades about 0.04 of its potential returns per unit of risk. Energy Services Fund is currently generating about 0.02 per unit of risk. If you would invest 1,712 in Icon Natural Resources on September 1, 2024 and sell it today you would earn a total of 135.00 from holding Icon Natural Resources or generate 7.89% 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. Energy Services Fund
Performance |
| Timeline |
| Icon Natural Resources |
| Energy Services |
Icon Natural and Energy Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Energy Services
The main advantage of trading using opposite Icon Natural and Energy Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Energy Services 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 Energy Services will offset losses from the drop in Energy Services' 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 |
| Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund | Energy Services vs. Precious Metals Fund |
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 CEOs Directory module to screen CEOs from public companies around the world.
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