Correlation Between Icon Natural and Vanguard Extended
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Vanguard Extended 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 Vanguard Extended 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 Vanguard Extended Market, you can compare the effects of market volatilities on Icon Natural and Vanguard Extended 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 Vanguard Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Vanguard Extended.
Diversification Opportunities for Icon Natural and Vanguard Extended
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and Vanguard is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Vanguard Extended Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Extended Market 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 Vanguard Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Extended Market has no effect on the direction of Icon Natural i.e., Icon Natural and Vanguard Extended go up and down completely randomly.
Pair Corralation between Icon Natural and Vanguard Extended
Assuming the 90 days horizon Icon Natural Resources is expected to generate 1.2 times more return on investment than Vanguard Extended. However, Icon Natural is 1.2 times more volatile than Vanguard Extended Market. It trades about -0.13 of its potential returns per unit of risk. Vanguard Extended Market is currently generating about -0.21 per unit of risk. If you would invest 1,768 in Icon Natural Resources on November 27, 2024 and sell it today you would lose (58.00) from holding Icon Natural Resources or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Natural Resources vs. Vanguard Extended Market
Performance |
| Timeline |
| Icon Natural Resources |
| Vanguard Extended Market |
Icon Natural and Vanguard Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Vanguard Extended
The main advantage of trading using opposite Icon Natural and Vanguard Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Vanguard Extended 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 Vanguard Extended will offset losses from the drop in Vanguard Extended'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 |
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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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