Correlation Between Icon Financial and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Icon Financial and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Dow Jones.
Diversification Opportunities for Icon Financial and Dow Jones
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Icon and Dow is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Icon Financial i.e., Icon Financial and Dow Jones go up and down completely randomly.
Pair Corralation between Icon Financial and Dow Jones
Assuming the 90 days horizon Icon Financial Fund is expected to under-perform the Dow Jones. In addition to that, Icon Financial is 3.24 times more volatile than Dow Jones Industrial. It trades about -0.16 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.06 per unit of volatility. If you would invest 4,429,651 in Dow Jones Industrial on October 23, 2024 and sell it today you would lose (80,868) from holding Dow Jones Industrial or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
Icon Financial Fund vs. Dow Jones Industrial
Performance |
| Timeline |
Icon Financial and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Icon Financial Fund
Pair trading matchups for Icon Financial
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Icon Financial and Dow Jones
The main advantage of trading using opposite Icon Financial and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Icon Financial vs. Ishares Municipal Bond | Icon Financial vs. Blrc Sgy Mnp | Icon Financial vs. Inverse Government Long | Icon Financial vs. Hartford Municipal Income |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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