Correlation Between Icon Energy and BW LPG
Can any of the company-specific risk be diversified away by investing in both Icon Energy and BW LPG 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 Energy and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Energy Corp and BW LPG Limited, you can compare the effects of market volatilities on Icon Energy and BW LPG 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 Energy with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Energy and BW LPG.
Diversification Opportunities for Icon Energy and BW LPG
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Icon and BWLP is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Icon Energy Corp and BW LPG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG Limited and Icon Energy 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 Energy Corp are associated (or correlated) with BW LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW LPG Limited has no effect on the direction of Icon Energy i.e., Icon Energy and BW LPG go up and down completely randomly.
Pair Corralation between Icon Energy and BW LPG
Given the investment horizon of 90 days Icon Energy Corp is expected to generate 4.26 times more return on investment than BW LPG. However, Icon Energy is 4.26 times more volatile than BW LPG Limited. It trades about 0.25 of its potential returns per unit of risk. BW LPG Limited is currently generating about 0.26 per unit of risk. If you would invest 197.00 in Icon Energy Corp on October 22, 2024 and sell it today you would earn a total of 118.00 from holding Icon Energy Corp or generate 59.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Energy Corp vs. BW LPG Limited
Performance |
| Timeline |
| Icon Energy Corp |
| BW LPG Limited |
Icon Energy and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Energy and BW LPG
The main advantage of trading using opposite Icon Energy and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Energy position performs unexpectedly, BW LPG 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 BW LPG will offset losses from the drop in BW LPG's long position.| Icon Energy vs. Fair Isaac | Icon Energy vs. Mayfair Gold Corp | Icon Energy vs. Altair Engineering | Icon Energy vs. Grupo Aeroportuario del |
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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