Correlation Between Icon Financial and Capital World
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Capital World 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 Capital World 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 Capital World Bond, you can compare the effects of market volatilities on Icon Financial and Capital World 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 Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Capital World.
Diversification Opportunities for Icon Financial and Capital World
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Icon and Capital is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Capital World Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Bond 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 Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Bond has no effect on the direction of Icon Financial i.e., Icon Financial and Capital World go up and down completely randomly.
Pair Corralation between Icon Financial and Capital World
Assuming the 90 days horizon Icon Financial Fund is expected to generate 3.2 times more return on investment than Capital World. However, Icon Financial is 3.2 times more volatile than Capital World Bond. It trades about 0.2 of its potential returns per unit of risk. Capital World Bond is currently generating about -0.1 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Financial Fund vs. Capital World Bond
Performance |
| Timeline |
| Icon Financial |
| Capital World Bond |
Icon Financial and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Capital World
The main advantage of trading using opposite Icon Financial and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World'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 |
| Capital World vs. Vanguard Financials Index | Capital World vs. 1919 Financial Services | Capital World vs. Icon Financial Fund | Capital World vs. John Hancock Financial |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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