Correlation Between Icon Natural and Emerging Growth
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Emerging Growth 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 Emerging Growth 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 Emerging Growth Fund, you can compare the effects of market volatilities on Icon Natural and Emerging Growth 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 Emerging Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Emerging Growth.
Diversification Opportunities for Icon Natural and Emerging Growth
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and Emerging is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Emerging Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Growth 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 Emerging Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Growth has no effect on the direction of Icon Natural i.e., Icon Natural and Emerging Growth go up and down completely randomly.
Pair Corralation between Icon Natural and Emerging Growth
Assuming the 90 days horizon Icon Natural is expected to generate 1.23 times less return on investment than Emerging Growth. But when comparing it to its historical volatility, Icon Natural Resources is 1.14 times less risky than Emerging Growth. It trades about 0.02 of its potential returns per unit of risk. Emerging Growth Fund is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,082 in Emerging Growth Fund on November 27, 2024 and sell it today you would earn a total of 105.00 from holding Emerging Growth Fund or generate 9.7% 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. Emerging Growth Fund
Performance |
| Timeline |
| Icon Natural Resources |
| Emerging Growth |
Icon Natural and Emerging Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Emerging Growth
The main advantage of trading using opposite Icon Natural and Emerging Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Emerging Growth 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 Emerging Growth will offset losses from the drop in Emerging Growth'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 |
| Emerging Growth vs. Upright Assets Allocation | Emerging Growth vs. Knights Of Umbus | Emerging Growth vs. T Rowe Price | Emerging Growth vs. Balanced Allocation 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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