Correlation Between Financial Industries and Icon Financial
Can any of the company-specific risk be diversified away by investing in both Financial Industries and Icon Financial 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 Financial Industries and Icon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Icon Financial Fund, you can compare the effects of market volatilities on Financial Industries and Icon Financial 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 Financial Industries with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Icon Financial.
Diversification Opportunities for Financial Industries and Icon Financial
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Financial and Icon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Icon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Financial has no effect on the direction of Financial Industries i.e., Financial Industries and Icon Financial go up and down completely randomly.
Pair Corralation between Financial Industries and Icon Financial
Assuming the 90 days horizon Financial Industries Fund is expected to under-perform the Icon Financial. In addition to that, Financial Industries is 1.03 times more volatile than Icon Financial Fund. It trades about -0.15 of its total potential returns per unit of risk. Icon Financial Fund is currently generating about -0.15 per unit of volatility. If you would invest 989.00 in Icon Financial Fund on November 27, 2024 and sell it today you would lose (25.00) from holding Icon Financial Fund or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Industries Fund vs. Icon Financial Fund
Performance |
| Timeline |
| Financial Industries |
| Icon Financial |
Financial Industries and Icon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Icon Financial
The main advantage of trading using opposite Financial Industries and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Icon Financial 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 Icon Financial will offset losses from the drop in Icon Financial's long position.| Financial Industries vs. Ashmore Emerging Markets | Financial Industries vs. Nuveen Small Cap | Financial Industries vs. Astoncrosswind Small Cap | Financial Industries vs. Glg Intl Small |
| Icon Financial vs. T Rowe Price | Icon Financial vs. Touchstone Sands Capital | Icon Financial vs. Rational Defensive Growth | Icon Financial vs. L Abbett Growth |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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