Correlation Between Icon Natural and Western Asset
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Western Asset 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 Western Asset 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 Western Asset Inflation, you can compare the effects of market volatilities on Icon Natural and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Western Asset.
Diversification Opportunities for Icon Natural and Western Asset
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Icon and Western is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Icon Natural i.e., Icon Natural and Western Asset go up and down completely randomly.
Pair Corralation between Icon Natural and Western Asset
Assuming the 90 days horizon Icon Natural Resources is expected to generate 6.37 times more return on investment than Western Asset. However, Icon Natural is 6.37 times more volatile than Western Asset Inflation. It trades about 0.09 of its potential returns per unit of risk. Western Asset Inflation is currently generating about 0.06 per unit of risk. If you would invest 1,782 in Icon Natural Resources on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Icon Natural Resources or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Icon Natural Resources vs. Western Asset Inflation
Performance |
| Timeline |
| Icon Natural Resources |
| Western Asset Inflation |
Icon Natural and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Western Asset
The main advantage of trading using opposite Icon Natural and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Clearbridge Energy Mlp | Western Asset vs. World Energy Fund | Western Asset vs. Icon Natural Resources | Western Asset vs. Energy Basic Materials |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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