Correlation Between Icon Financial and Transamerica Small
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Transamerica 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 Transamerica 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 Transamerica Small Cap, you can compare the effects of market volatilities on Icon Financial and Transamerica 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 Transamerica Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Transamerica Small.
Diversification Opportunities for Icon Financial and Transamerica Small
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and Transamerica is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Transamerica Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica 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 Transamerica Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Small Cap has no effect on the direction of Icon Financial i.e., Icon Financial and Transamerica Small go up and down completely randomly.
Pair Corralation between Icon Financial and Transamerica Small
Assuming the 90 days horizon Icon Financial Fund is expected to under-perform the Transamerica Small. In addition to that, Icon Financial is 1.33 times more volatile than Transamerica Small Cap. It trades about -0.03 of its total potential returns per unit of risk. Transamerica Small Cap is currently generating about 0.09 per unit of volatility. If you would invest 646.00 in Transamerica Small Cap on September 1, 2024 and sell it today you would earn a total of 93.00 from holding Transamerica Small Cap or generate 14.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Icon Financial Fund vs. Transamerica Small Cap
Performance |
| Timeline |
| Icon Financial |
| Transamerica Small Cap |
Icon Financial and Transamerica Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Transamerica Small
The main advantage of trading using opposite Icon Financial and Transamerica Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Transamerica 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 Transamerica Small will offset losses from the drop in Transamerica Small's long position.| Icon Financial vs. Nuveen Minnesota Municipal | Icon Financial vs. Bbh Intermediate Municipal | Icon Financial vs. Blrc Sgy Mnp | Icon Financial vs. T Rowe Price |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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