Correlation Between Government Securities and Icon Financial
Can any of the company-specific risk be diversified away by investing in both Government Securities 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 Government Securities and Icon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Government Securities Fund and Icon Financial Fund, you can compare the effects of market volatilities on Government Securities 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 Government Securities with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Government Securities and Icon Financial.
Diversification Opportunities for Government Securities and Icon Financial
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Government and Icon is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities 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 Government Securities 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 Government Securities 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 Government Securities i.e., Government Securities and Icon Financial go up and down completely randomly.
Pair Corralation between Government Securities and Icon Financial
Assuming the 90 days horizon Government Securities is expected to generate 1.94 times less return on investment than Icon Financial. But when comparing it to its historical volatility, Government Securities Fund is 3.19 times less risky than Icon Financial. It trades about 0.04 of its potential returns per unit of risk. Icon Financial Fund is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 920.00 in Icon Financial Fund on September 4, 2024 and sell it today you would earn a total of 85.00 from holding Icon Financial Fund or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Government Securities Fund vs. Icon Financial Fund
Performance |
| Timeline |
| Government Securities |
| Icon Financial |
Government Securities and Icon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Government Securities and Icon Financial
The main advantage of trading using opposite Government Securities and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Securities 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.| Government Securities vs. T Rowe Price | Government Securities vs. Versatile Bond Portfolio | Government Securities vs. Multisector Bond Sma | Government Securities vs. Gmo High Yield |
| Icon Financial vs. Inverse Government Long | Icon Financial vs. Dws Government Money | Icon Financial vs. Prudential Government Income | Icon Financial vs. Government Securities 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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