Correlation Between Icon Financial and Icon Equity
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Icon Equity 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 Equity 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 Equity Income, you can compare the effects of market volatilities on Icon Financial and Icon Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Icon Equity.
Diversification Opportunities for Icon Financial and Icon Equity
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Icon and ICON is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Icon Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Equity Income 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Equity Income has no effect on the direction of Icon Financial i.e., Icon Financial and Icon Equity go up and down completely randomly.
Pair Corralation between Icon Financial and Icon Equity
Assuming the 90 days horizon Icon Financial is expected to generate 3.57 times less return on investment than Icon Equity. In addition to that, Icon Financial is 2.03 times more volatile than Icon Equity Income. It trades about 0.01 of its total potential returns per unit of risk. Icon Equity Income is currently generating about 0.07 per unit of volatility. If you would invest 1,474 in Icon Equity Income on August 31, 2024 and sell it today you would earn a total of 250.00 from holding Icon Equity Income or generate 16.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Financial Fund vs. Icon Equity Income
Performance |
| Timeline |
| Icon Financial |
| Icon Equity Income |
Icon Financial and Icon Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Icon Equity
The main advantage of trading using opposite Icon Financial and Icon Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Icon Equity 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 Equity will offset losses from the drop in Icon Equity's long position.| Icon Financial vs. Vanguard Financials Index | Icon Financial vs. Regional Bank Fund | Icon Financial vs. Financial Industries Fund | Icon Financial vs. T Rowe Price |
| Icon Equity vs. Icon Equity Income | Icon Equity vs. American Beacon Balanced | Icon Equity vs. Lord Abbett Value | Icon Equity vs. Victory Floating Rate |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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