Correlation Between Icon Information and Guidemark(r) Small/mid
Can any of the company-specific risk be diversified away by investing in both Icon Information and Guidemark(r) Small/mid 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 Guidemark(r) Small/mid 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 Guidemark Smallmid Cap, you can compare the effects of market volatilities on Icon Information and Guidemark(r) Small/mid 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 Guidemark(r) Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Information and Guidemark(r) Small/mid.
Diversification Opportunities for Icon Information and Guidemark(r) Small/mid
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICON and Guidemark(r) is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Icon Information Technology and Guidemark Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Smallmid Cap 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 Guidemark(r) Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Smallmid Cap has no effect on the direction of Icon Information i.e., Icon Information and Guidemark(r) Small/mid go up and down completely randomly.
Pair Corralation between Icon Information and Guidemark(r) Small/mid
Assuming the 90 days horizon Icon Information Technology is expected to generate 0.38 times more return on investment than Guidemark(r) Small/mid. However, Icon Information Technology is 2.65 times less risky than Guidemark(r) Small/mid. It trades about 0.21 of its potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about -0.11 per unit of risk. If you would invest 1,462 in Icon Information Technology on October 25, 2024 and sell it today you would earn a total of 50.00 from holding Icon Information Technology or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Information Technology vs. Guidemark Smallmid Cap
Performance |
| Timeline |
| Icon Information Tec |
| Guidemark Smallmid Cap |
Icon Information and Guidemark(r) Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Information and Guidemark(r) Small/mid
The main advantage of trading using opposite Icon Information and Guidemark(r) Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Information position performs unexpectedly, Guidemark(r) Small/mid 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 Guidemark(r) Small/mid will offset losses from the drop in Guidemark(r) Small/mid's long position.| Icon Information vs. Sierra E Retirement | Icon Information vs. Columbia Moderate Growth | Icon Information vs. Franklin Lifesmart Retirement | Icon Information vs. Transamerica Cleartrack Retirement |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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