Correlation Between State Street and Icon Financial
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Icon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Institutional and Icon Financial Fund, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Icon Financial.
Diversification Opportunities for State Street and Icon Financial
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between State and Icon is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding State Street Institutional and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and State Street 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 State Street Institutional 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 State Street i.e., State Street and Icon Financial go up and down completely randomly.
Pair Corralation between State Street and Icon Financial
Assuming the 90 days horizon State Street Institutional is expected to generate 0.19 times more return on investment than Icon Financial. However, State Street Institutional is 5.28 times less risky than Icon Financial. It trades about 0.05 of its potential returns per unit of risk. Icon Financial Fund is currently generating about -0.03 per unit of risk. If you would invest 98.00 in State Street Institutional on September 5, 2024 and sell it today you would earn a total of 2.00 from holding State Street Institutional or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.43% |
| Values | Daily Returns |
State Street Institutional vs. Icon Financial Fund
Performance |
| Timeline |
| State Street Institu |
| Icon Financial |
State Street and Icon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Icon Financial
The main advantage of trading using opposite State Street and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Icon Financial Fund | State Street vs. Davis Financial Fund | State Street vs. Fidelity Advisor Financial | State Street vs. Prudential Financial Services |
| Icon Financial vs. Harbor Diversified International | Icon Financial vs. Lord Abbett Diversified | Icon Financial vs. Aqr Diversified Arbitrage | Icon Financial vs. Adams Diversified Equity |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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