Correlation Between ICON Project and BLZ
Can any of the company-specific risk be diversified away by investing in both ICON Project and BLZ 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 Project and BLZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICON Project and BLZ, you can compare the effects of market volatilities on ICON Project and BLZ 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 Project with a short position of BLZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON Project and BLZ.
Diversification Opportunities for ICON Project and BLZ
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICON and BLZ is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ICON Project and BLZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLZ and ICON Project 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 Project are associated (or correlated) with BLZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLZ has no effect on the direction of ICON Project i.e., ICON Project and BLZ go up and down completely randomly.
Pair Corralation between ICON Project and BLZ
Assuming the 90 days trading horizon ICON Project is expected to generate 0.76 times more return on investment than BLZ. However, ICON Project is 1.31 times less risky than BLZ. It trades about 0.21 of its potential returns per unit of risk. BLZ is currently generating about 0.11 per unit of risk. If you would invest 12.00 in ICON Project on August 31, 2024 and sell it today you would earn a total of 9.00 from holding ICON Project or generate 75.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICON Project vs. BLZ
Performance |
| Timeline |
| ICON Project |
| BLZ |
ICON Project and BLZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICON Project and BLZ
The main advantage of trading using opposite ICON Project and BLZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICON Project position performs unexpectedly, BLZ 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 BLZ will offset losses from the drop in BLZ's long position.The idea behind ICON Project and BLZ pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |