Correlation Between Icon Financial and Icon Information
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Icon Information 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 Icon Information 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 Icon Information Technology, you can compare the effects of market volatilities on Icon Financial and Icon Information 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 Icon Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Icon Information.
Diversification Opportunities for Icon Financial and Icon Information
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and Icon is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Icon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Information Tec 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 Icon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Information Tec has no effect on the direction of Icon Financial i.e., Icon Financial and Icon Information go up and down completely randomly.
Pair Corralation between Icon Financial and Icon Information
Assuming the 90 days horizon Icon Financial Fund is expected to generate 1.07 times more return on investment than Icon Information. However, Icon Financial is 1.07 times more volatile than Icon Information Technology. It trades about 0.2 of its potential returns per unit of risk. Icon Information Technology is currently generating about 0.13 per unit of risk. If you would invest 1,091 in Icon Financial Fund on August 28, 2024 and sell it today you would earn a total of 61.00 from holding Icon Financial Fund or generate 5.59% 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. Icon Information Technology
Performance |
| Timeline |
| Icon Financial |
| Icon Information Tec |
Icon Financial and Icon Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Icon Information
The main advantage of trading using opposite Icon Financial and Icon Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Icon Information 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 Icon Information will offset losses from the drop in Icon Information's long position.| Icon Financial vs. Artisan Small Cap | Icon Financial vs. Praxis Growth Index | Icon Financial vs. Champlain Mid Cap | Icon Financial vs. Mid Cap Growth |
| Icon Information vs. Calvert Moderate Allocation | Icon Information vs. Blackrock Moderate Prepared | Icon Information vs. Dimensional Retirement Income | Icon Information vs. Jp Morgan Smartretirement |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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