Correlation Between American Funds and Icon Natural
Can any of the company-specific risk be diversified away by investing in both American Funds and Icon Natural 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 American Funds and Icon Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Emerging and Icon Natural Resources, you can compare the effects of market volatilities on American Funds and Icon Natural 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 American Funds with a short position of Icon Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Icon Natural.
Diversification Opportunities for American Funds and Icon Natural
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Icon is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Emerging and Icon Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Natural Resources and American Funds 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 American Funds Emerging are associated (or correlated) with Icon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Natural Resources has no effect on the direction of American Funds i.e., American Funds and Icon Natural go up and down completely randomly.
Pair Corralation between American Funds and Icon Natural
Assuming the 90 days horizon American Funds is expected to generate 2.17 times less return on investment than Icon Natural. But when comparing it to its historical volatility, American Funds Emerging is 2.87 times less risky than Icon Natural. It trades about 0.06 of its potential returns per unit of risk. Icon Natural Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,521 in Icon Natural Resources on September 12, 2024 and sell it today you would earn a total of 282.00 from holding Icon Natural Resources or generate 18.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Emerging vs. Icon Natural Resources
Performance |
| Timeline |
| American Funds Emerging |
| Icon Natural Resources |
American Funds and Icon Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Icon Natural
The main advantage of trading using opposite American Funds and Icon Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Icon Natural 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 Natural will offset losses from the drop in Icon Natural's long position.| American Funds vs. Fidelity Small Cap | American Funds vs. Fpa Queens Road | American Funds vs. Valic Company I | American Funds vs. Lsv Small Cap |
| Icon Natural vs. Icon Financial Fund | Icon Natural vs. Dreyfus Natural Resources | Icon Natural vs. Icon Natural Resources | Icon Natural vs. Icon Information Technology |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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