Correlation Between Icon Financial and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Financial Industries 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 Financial Industries 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 Financial Industries Fund, you can compare the effects of market volatilities on Icon Financial and Financial Industries 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 Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Financial Industries.
Diversification Opportunities for Icon Financial and Financial Industries
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and Financial is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries 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 Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Icon Financial i.e., Icon Financial and Financial Industries go up and down completely randomly.
Pair Corralation between Icon Financial and Financial Industries
Assuming the 90 days horizon Icon Financial Fund is expected to generate 0.97 times more return on investment than Financial Industries. However, Icon Financial Fund is 1.03 times less risky than Financial Industries. It trades about -0.15 of its potential returns per unit of risk. Financial Industries Fund is currently generating about -0.15 per unit of risk. If you would invest 989.00 in Icon Financial Fund on November 27, 2024 and sell it today you would lose (25.00) from holding Icon Financial Fund or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Financial Fund vs. Financial Industries Fund
Performance |
| Timeline |
| Icon Financial |
| Financial Industries |
Icon Financial and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Financial Industries
The main advantage of trading using opposite Icon Financial and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.| Icon Financial vs. T Rowe Price | Icon Financial vs. Touchstone Sands Capital | Icon Financial vs. Rational Defensive Growth | Icon Financial vs. L Abbett Growth |
| Financial Industries vs. Ashmore Emerging Markets | Financial Industries vs. Nuveen Small Cap | Financial Industries vs. Astoncrosswind Small Cap | Financial Industries vs. Glg Intl Small |
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 CEOs Directory module to screen CEOs from public companies around the world.
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