Correlation Between Icon Financial and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Regional Bank 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 Regional Bank 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 Regional Bank Fund, you can compare the effects of market volatilities on Icon Financial and Regional Bank 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 Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Regional Bank.
Diversification Opportunities for Icon Financial and Regional Bank
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and REGIONAL is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank 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 Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Icon Financial i.e., Icon Financial and Regional Bank go up and down completely randomly.
Pair Corralation between Icon Financial and Regional Bank
Assuming the 90 days horizon Icon Financial Fund is expected to under-perform the Regional Bank. In addition to that, Icon Financial is 1.16 times more volatile than Regional Bank Fund. It trades about -0.08 of its total potential returns per unit of risk. Regional Bank Fund is currently generating about 0.23 per unit of volatility. If you would invest 2,954 in Regional Bank Fund on September 2, 2024 and sell it today you would earn a total of 431.00 from holding Regional Bank Fund or generate 14.59% 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. Regional Bank Fund
Performance |
| Timeline |
| Icon Financial |
| Regional Bank |
Icon Financial and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Regional Bank
The main advantage of trading using opposite Icon Financial and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank's long position.| Icon Financial vs. Pace International Emerging | Icon Financial vs. Pnc Emerging Markets | Icon Financial vs. Origin Emerging Markets | Icon Financial vs. Eagle Mlp Strategy |
| Regional Bank vs. Ab Select Equity | Regional Bank vs. Scharf Fund Retail | Regional Bank vs. The Gabelli Equity | Regional Bank vs. Cutler Equity |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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