Correlation Between Icon Financial and Icon Bond
Can any of the company-specific risk be diversified away by investing in both Icon Financial and Icon Bond 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 Icon Bond 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 Icon Bond Fund, you can compare the effects of market volatilities on Icon Financial and Icon Bond 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 Icon Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Icon Bond.
Diversification Opportunities for Icon Financial and Icon Bond
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and Icon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Icon Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Bond Fund 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 Icon Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Bond Fund has no effect on the direction of Icon Financial i.e., Icon Financial and Icon Bond go up and down completely randomly.
Pair Corralation between Icon Financial and Icon Bond
Assuming the 90 days horizon Icon Financial Fund is expected to generate 10.09 times more return on investment than Icon Bond. However, Icon Financial is 10.09 times more volatile than Icon Bond Fund. It trades about 0.2 of its potential returns per unit of risk. Icon Bond Fund is currently generating about 0.21 per unit of risk. If you would invest 1,108 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 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Financial Fund vs. Icon Bond Fund
Performance |
| Timeline |
| Icon Financial |
| Icon Bond Fund |
Icon Financial and Icon Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and Icon Bond
The main advantage of trading using opposite Icon Financial and Icon Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial position performs unexpectedly, Icon Bond 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 Icon Bond will offset losses from the drop in Icon Bond's long position.| Icon Financial vs. Highland Longshort Healthcare | Icon Financial vs. Invesco Global Health | Icon Financial vs. Tekla Healthcare Opportunities | Icon Financial vs. Live Oak Health |
| Icon Bond vs. Icon Bond Fund | Icon Bond vs. Icon Equity Income | Icon Bond vs. Icon Longshort Fund | Icon Bond vs. Icon Longshort 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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