Correlation Between Icon Financial and Consumer Services
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Consumer 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 Financial and Consumer Services 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 Consumer Services Ultrasector, you can compare the effects of market volatilities on Icon Financial and Consumer 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 Financial with a short position of Consumer Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Consumer Services.
Diversification Opportunities for Icon Financial and Consumer Services
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and Consumer is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Consumer Services Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Services 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 Consumer Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Services has no effect on the direction of Icon Financial i.e., Icon Financial and Consumer Services go up and down completely randomly.
Pair Corralation between Icon Financial and Consumer Services
Assuming the 90 days horizon Icon Financial Fund is expected to under-perform the Consumer Services. In addition to that, Icon Financial is 2.01 times more volatile than Consumer Services Ultrasector. It trades about -0.08 of its total potential returns per unit of risk. Consumer Services Ultrasector is currently generating about 0.42 per unit of volatility. If you would invest 6,290 in Consumer Services Ultrasector on September 3, 2024 and sell it today you would earn a total of 972.00 from holding Consumer Services Ultrasector or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Financial Fund vs. Consumer Services Ultrasector
Performance |
| Timeline |
| Icon Financial |
| Consumer Services |
Icon Financial and Consumer Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Consumer Services
The main advantage of trading using opposite Icon Financial and Consumer Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Consumer 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 Consumer Services will offset losses from the drop in Consumer Services' long position.| Icon Financial vs. Vanguard Financials Index | Icon Financial vs. Regional Bank Fund | Icon Financial vs. T Rowe Price | Icon Financial vs. Financial Industries Fund |
| Consumer Services vs. Royce Global Financial | Consumer Services vs. Vanguard Financials Index | Consumer Services vs. Davis Financial Fund | Consumer Services vs. Icon Financial 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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