Correlation Between Icon Bond and The Fairholme
Can any of the company-specific risk be diversified away by investing in both Icon Bond and The Fairholme 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 Bond and The Fairholme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Bond Fund and The Fairholme Fund, you can compare the effects of market volatilities on Icon Bond and The Fairholme 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 Bond with a short position of The Fairholme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Bond and The Fairholme.
Diversification Opportunities for Icon Bond and The Fairholme
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Icon and The is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Icon Bond Fund and The Fairholme Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Fairholme and Icon Bond 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 Bond Fund are associated (or correlated) with The Fairholme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Fairholme has no effect on the direction of Icon Bond i.e., Icon Bond and The Fairholme go up and down completely randomly.
Pair Corralation between Icon Bond and The Fairholme
Assuming the 90 days horizon Icon Bond Fund is expected to generate 0.1 times more return on investment than The Fairholme. However, Icon Bond Fund is 10.3 times less risky than The Fairholme. It trades about 0.26 of its potential returns per unit of risk. The Fairholme Fund is currently generating about -0.02 per unit of risk. If you would invest 836.00 in Icon Bond Fund on September 1, 2024 and sell it today you would earn a total of 35.00 from holding Icon Bond Fund or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Icon Bond Fund vs. The Fairholme Fund
Performance |
| Timeline |
| Icon Bond Fund |
| The Fairholme |
Icon Bond and The Fairholme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Bond and The Fairholme
The main advantage of trading using opposite Icon Bond and The Fairholme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Bond position performs unexpectedly, The Fairholme 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 The Fairholme will offset losses from the drop in The Fairholme's long position.| Icon Bond vs. Icon Bond Fund | Icon Bond vs. Icon Equity Income | Icon Bond vs. Icon Longshort Fund | Icon Bond vs. Icon Longshort Fund |
| The Fairholme vs. Ab Bond Inflation | The Fairholme vs. Touchstone Premium Yield | The Fairholme vs. Calamos Dynamic Convertible | The Fairholme vs. Dreyfusstandish Global Fixed |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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