Correlation Between Icon Financial and Hennessy Small
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Hennessy Small 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 Hennessy Small 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 Hennessy Small Cap, you can compare the effects of market volatilities on Icon Financial and Hennessy Small 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 Hennessy Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Hennessy Small.
Diversification Opportunities for Icon Financial and Hennessy Small
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Icon and Hennessy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Hennessy Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Small Cap 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 Hennessy Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Small Cap has no effect on the direction of Icon Financial i.e., Icon Financial and Hennessy Small go up and down completely randomly.
Pair Corralation between Icon Financial and Hennessy Small
Assuming the 90 days horizon Icon Financial Fund is expected to generate 0.54 times more return on investment than Hennessy Small. However, Icon Financial Fund is 1.85 times less risky than Hennessy Small. It trades about 0.06 of its potential returns per unit of risk. Hennessy Small Cap is currently generating about 0.03 per unit of risk. If you would invest 959.00 in Icon Financial Fund on October 23, 2024 and sell it today you would earn a total of 8.00 from holding Icon Financial Fund or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Financial Fund vs. Hennessy Small Cap
Performance |
| Timeline |
| Icon Financial |
| Hennessy Small Cap |
Icon Financial and Hennessy Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Hennessy Small
The main advantage of trading using opposite Icon Financial and Hennessy Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Hennessy Small 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 Hennessy Small will offset losses from the drop in Hennessy Small's long position.| Icon Financial vs. Hsbc Treasury Money | Icon Financial vs. State Street Master | Icon Financial vs. Aig Government Money | Icon Financial vs. Transamerica Funds |
| Hennessy Small vs. Barings High Yield | Hennessy Small vs. Prudential High Yield | Hennessy Small vs. Transamerica High Yield | Hennessy Small vs. Artisan High Income |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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