Correlation Between Smallcap Fund and Icon Information
Can any of the company-specific risk be diversified away by investing in both Smallcap Fund and Icon Information 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 Smallcap Fund and Icon Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Fund Fka and Icon Information Technology, you can compare the effects of market volatilities on Smallcap Fund and Icon Information 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 Smallcap Fund with a short position of Icon Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Icon Information.
Diversification Opportunities for Smallcap Fund and Icon Information
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smallcap and Icon is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Icon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Information Tec and Smallcap Fund 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 Smallcap Fund Fka are associated (or correlated) with Icon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Information Tec has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Icon Information go up and down completely randomly.
Pair Corralation between Smallcap Fund and Icon Information
Assuming the 90 days horizon Smallcap Fund is expected to generate 1.47 times less return on investment than Icon Information. In addition to that, Smallcap Fund is 1.08 times more volatile than Icon Information Technology. It trades about 0.2 of its total potential returns per unit of risk. Icon Information Technology is currently generating about 0.31 per unit of volatility. If you would invest 1,584 in Icon Information Technology on November 3, 2024 and sell it today you would earn a total of 104.00 from holding Icon Information Technology or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Fund Fka vs. Icon Information Technology
Performance |
| Timeline |
| Smallcap Fund Fka |
| Icon Information Tec |
Smallcap Fund and Icon Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Fund and Icon Information
The main advantage of trading using opposite Smallcap Fund and Icon Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund position performs unexpectedly, Icon Information 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 Information will offset losses from the drop in Icon Information's long position.| Smallcap Fund vs. Specialized Technology Fund | Smallcap Fund vs. Icon Information Technology | Smallcap Fund vs. Hennessy Technology Fund | Smallcap Fund vs. Columbia Global Technology |
| Icon Information vs. Mid Cap 15x Strategy | Icon Information vs. Vanguard Developed Markets | Icon Information vs. Old Westbury Short Term | Icon Information vs. Siit Emerging Markets |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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