Correlation Between AES and Icon Utilities

Can any of the company-specific risk be diversified away by investing in both AES and Icon Utilities 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 AES and Icon Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The AES and Icon Utilities Fund, you can compare the effects of market volatilities on AES and Icon Utilities 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 AES with a short position of Icon Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and Icon Utilities.

Diversification Opportunities for AES and Icon Utilities

-0.31

Correlation Coefficient

AES  Icon Utilities

Very good diversification

The 3 months correlation between AES and Icon is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Icon Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Utilities and AES 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 The AES are associated (or correlated) with Icon Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Utilities has no effect on the direction of AES i.e., AES and Icon Utilities go up and down completely randomly.

Pair Corralation between AES and Icon Utilities

Considering the 90-day investment horizon The AES is expected to under-perform the Icon Utilities. In addition to that, AES is 3.48 times more volatile than Icon Utilities Fund. It trades about -0.22 of its total potential returns per unit of risk. Icon Utilities Fund is currently generating about -0.03 per unit of volatility. If you would invest  947.00  in Icon Utilities Fund on September 17, 2024 and sell it today you would lose (16.00) from holding Icon Utilities Fund or give up 1.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

The AES  vs.  Icon Utilities Fund

AES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The AES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Icon Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Utilities Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Icon Utilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AES and Icon Utilities

The main advantage of trading using opposite AES and Icon Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES position performs unexpectedly, Icon Utilities 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 Utilities will offset losses from the drop in Icon Utilities' long position.

The idea behind The AES and Icon Utilities Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.