Correlation Between Icon Financial and Dreyfus Municipal
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Dreyfus Municipal 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 Dreyfus Municipal 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 Dreyfus Municipal Bond, you can compare the effects of market volatilities on Icon Financial and Dreyfus Municipal 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 Dreyfus Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Dreyfus Municipal.
Diversification Opportunities for Icon Financial and Dreyfus Municipal
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Icon and DREYFUS is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Dreyfus Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Municipal Bond 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 Dreyfus Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Municipal Bond has no effect on the direction of Icon Financial i.e., Icon Financial and Dreyfus Municipal go up and down completely randomly.
Pair Corralation between Icon Financial and Dreyfus Municipal
Assuming the 90 days horizon Icon Financial Fund is expected to under-perform the Dreyfus Municipal. In addition to that, Icon Financial is 10.96 times more volatile than Dreyfus Municipal Bond. It trades about -0.08 of its total potential returns per unit of risk. Dreyfus Municipal Bond is currently generating about 0.18 per unit of volatility. If you would invest 1,219 in Dreyfus Municipal Bond on September 3, 2024 and sell it today you would earn a total of 14.00 from holding Dreyfus Municipal Bond or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Financial Fund vs. Dreyfus Municipal Bond
Performance |
| Timeline |
| Icon Financial |
| Dreyfus Municipal Bond |
Icon Financial and Dreyfus Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Dreyfus Municipal
The main advantage of trading using opposite Icon Financial and Dreyfus Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Dreyfus Municipal 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 Dreyfus Municipal will offset losses from the drop in Dreyfus Municipal's 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 |
| Dreyfus Municipal vs. Financials Ultrasector Profund | Dreyfus Municipal vs. Icon Financial Fund | Dreyfus Municipal vs. Vanguard Financials Index | Dreyfus Municipal vs. Mesirow Financial Small |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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