Correlation Between Longleaf Partners and Icon Equity
Can any of the company-specific risk be diversified away by investing in both Longleaf Partners and Icon Equity 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 Longleaf Partners and Icon Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longleaf Partners Fund and Icon Equity Income, you can compare the effects of market volatilities on Longleaf Partners and Icon Equity 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 Longleaf Partners with a short position of Icon Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longleaf Partners and Icon Equity.
Diversification Opportunities for Longleaf Partners and Icon Equity
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Longleaf and Icon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Fund and Icon Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Equity Income and Longleaf Partners 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 Longleaf Partners Fund are associated (or correlated) with Icon Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Equity Income has no effect on the direction of Longleaf Partners i.e., Longleaf Partners and Icon Equity go up and down completely randomly.
Pair Corralation between Longleaf Partners and Icon Equity
Assuming the 90 days horizon Longleaf Partners is expected to generate 2.39 times less return on investment than Icon Equity. But when comparing it to its historical volatility, Longleaf Partners Fund is 1.3 times less risky than Icon Equity. It trades about 0.08 of its potential returns per unit of risk. Icon Equity Income is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,688 in Icon Equity Income on August 28, 2024 and sell it today you would earn a total of 50.00 from holding Icon Equity Income or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longleaf Partners Fund vs. Icon Equity Income
Performance |
| Timeline |
| Longleaf Partners |
| Icon Equity Income |
Longleaf Partners and Icon Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longleaf Partners and Icon Equity
The main advantage of trading using opposite Longleaf Partners and Icon Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners position performs unexpectedly, Icon Equity 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 Equity will offset losses from the drop in Icon Equity's long position.| Longleaf Partners vs. Longleaf Partners Global | Longleaf Partners vs. Longleaf Partners Small Cap | Longleaf Partners vs. Northern Institutional Funds | Longleaf Partners vs. Dreyfus Yield Enhancement |
| Icon Equity vs. Icon Bond Fund | Icon Equity vs. Icon Bond Fund | Icon Equity vs. Icon Longshort Fund | Icon Equity vs. Icon Longshort Fund |
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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