Correlation Between Icon Financial and Transamerica Growth
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Transamerica Growth 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 Growth 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 Growth T, you can compare the effects of market volatilities on Icon Financial and Transamerica Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Transamerica Growth.
Diversification Opportunities for Icon Financial and Transamerica Growth
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and Transamerica is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Transamerica Growth T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Growth 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Growth has no effect on the direction of Icon Financial i.e., Icon Financial and Transamerica Growth go up and down completely randomly.
Pair Corralation between Icon Financial and Transamerica Growth
Assuming the 90 days horizon Icon Financial Fund is expected to under-perform the Transamerica Growth. In addition to that, Icon Financial is 3.67 times more volatile than Transamerica Growth T. It trades about -0.07 of its total potential returns per unit of risk. Transamerica Growth T is currently generating about 0.27 per unit of volatility. If you would invest 12,055 in Transamerica Growth T on September 1, 2024 and sell it today you would earn a total of 686.00 from holding Transamerica Growth T or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Icon Financial Fund vs. Transamerica Growth T
Performance |
| Timeline |
| Icon Financial |
| Transamerica Growth |
Icon Financial and Transamerica Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Transamerica Growth
The main advantage of trading using opposite Icon Financial and Transamerica Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Transamerica Growth 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 Growth will offset losses from the drop in Transamerica Growth'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 |
| Transamerica Growth vs. Icon Financial Fund | Transamerica Growth vs. Mesirow Financial Small | Transamerica Growth vs. Blackrock Financial Institutions | Transamerica Growth vs. Davis Financial Fund |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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