Correlation Between Icon Information and Invesco American
Can any of the company-specific risk be diversified away by investing in both Icon Information and Invesco American 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 Information and Invesco American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Information Technology and Invesco American Franchise, you can compare the effects of market volatilities on Icon Information and Invesco American 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 Information with a short position of Invesco American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Information and Invesco American.
Diversification Opportunities for Icon Information and Invesco American
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and Invesco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Icon Information Technology and Invesco American Franchise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco American Fra and Icon Information 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 Information Technology are associated (or correlated) with Invesco American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco American Fra has no effect on the direction of Icon Information i.e., Icon Information and Invesco American go up and down completely randomly.
Pair Corralation between Icon Information and Invesco American
Assuming the 90 days horizon Icon Information is expected to generate 3.44 times less return on investment than Invesco American. But when comparing it to its historical volatility, Icon Information Technology is 1.27 times less risky than Invesco American. It trades about 0.03 of its potential returns per unit of risk. Invesco American Franchise is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,792 in Invesco American Franchise on August 30, 2024 and sell it today you would earn a total of 1,239 from holding Invesco American Franchise or generate 69.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Information Technology vs. Invesco American Franchise
Performance |
| Timeline |
| Icon Information Tec |
| Invesco American Fra |
Icon Information and Invesco American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Information and Invesco American
The main advantage of trading using opposite Icon Information and Invesco American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Information position performs unexpectedly, Invesco American 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 American will offset losses from the drop in Invesco American's long position.| Icon Information vs. Federated Short Intermediate Duration | Icon Information vs. Mirova Global Green | Icon Information vs. Ambrus Core Bond | Icon Information vs. Versatile Bond Portfolio |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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