Correlation Between Icon Financial and Invesco Small
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Invesco 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 Invesco 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 Invesco Small Cap, you can compare the effects of market volatilities on Icon Financial and Invesco 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 Invesco Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Invesco Small.
Diversification Opportunities for Icon Financial and Invesco Small
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Icon and Invesco is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Invesco Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco 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 Invesco Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Small Cap has no effect on the direction of Icon Financial i.e., Icon Financial and Invesco Small go up and down completely randomly.
Pair Corralation between Icon Financial and Invesco Small
Assuming the 90 days horizon Icon Financial is expected to generate 3.55 times less return on investment than Invesco Small. But when comparing it to its historical volatility, Icon Financial Fund is 1.01 times less risky than Invesco Small. It trades about 0.02 of its potential returns per unit of risk. Invesco Small Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,021 in Invesco Small Cap on September 13, 2024 and sell it today you would earn a total of 444.00 from holding Invesco Small Cap or generate 43.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Financial Fund vs. Invesco Small Cap
Performance |
| Timeline |
| Icon Financial |
| Invesco Small Cap |
Icon Financial and Invesco Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Invesco Small
The main advantage of trading using opposite Icon Financial and Invesco Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Invesco 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 Invesco Small will offset losses from the drop in Invesco Small's long position.| Icon Financial vs. Locorr Market Trend | Icon Financial vs. Transamerica Emerging Markets | Icon Financial vs. Ashmore Emerging Markets | Icon Financial vs. Kinetics Market Opportunities |
| Invesco Small vs. Invesco Municipal Income | Invesco Small vs. Invesco Municipal Income | Invesco Small vs. Invesco Municipal Income | Invesco Small vs. Oppenheimer Rising Dividends |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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