Correlation Between Icon Financial and Bridge Builder
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Bridge Builder 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 Financial and Bridge Builder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Financial Fund and Bridge Builder E, you can compare the effects of market volatilities on Icon Financial and Bridge Builder 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 Financial with a short position of Bridge Builder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Bridge Builder.
Diversification Opportunities for Icon Financial and Bridge Builder
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Icon and Bridge is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Bridge Builder E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder E and Icon Financial 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 Financial Fund are associated (or correlated) with Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder E has no effect on the direction of Icon Financial i.e., Icon Financial and Bridge Builder go up and down completely randomly.
Pair Corralation between Icon Financial and Bridge Builder
Assuming the 90 days horizon Icon Financial Fund is expected to generate 3.71 times more return on investment than Bridge Builder. However, Icon Financial is 3.71 times more volatile than Bridge Builder E. It trades about 0.19 of its potential returns per unit of risk. Bridge Builder E is currently generating about 0.06 per unit of risk. If you would invest 1,091 in Icon Financial Fund on August 29, 2024 and sell it today you would earn a total of 58.00 from holding Icon Financial Fund or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Financial Fund vs. Bridge Builder E
Performance |
| Timeline |
| Icon Financial |
| Bridge Builder E |
Icon Financial and Bridge Builder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Bridge Builder
The main advantage of trading using opposite Icon Financial and Bridge Builder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Bridge Builder 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 Bridge Builder will offset losses from the drop in Bridge Builder's long position.| Icon Financial vs. Vanguard Financials Index | Icon Financial vs. T Rowe Price | Icon Financial vs. Davis Financial Fund | Icon Financial vs. HUMANA INC |
| Bridge Builder vs. Davis Financial Fund | Bridge Builder vs. Transamerica Financial Life | Bridge Builder vs. Icon Financial Fund | Bridge Builder vs. First Trust Specialty |
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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