Correlation Between Copeland Risk and Icon Financial

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

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

Diversification Opportunities for Copeland Risk and Icon Financial

0.62

Correlation Coefficient

Copeland Risk  Icon Financial

Poor diversification

The 3 months correlation between Copeland and Icon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Copeland Risk Managed and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and Copeland Risk 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 Copeland Risk Managed 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 Copeland Risk i.e., Copeland Risk and Icon Financial go up and down completely randomly.

Pair Corralation between Copeland Risk and Icon Financial

Assuming the 90 days horizon Copeland Risk Managed is expected to generate 0.92 times more return on investment than Icon Financial. However, Copeland Risk Managed is 1.09 times less risky than Icon Financial. It trades about 0.02 of its potential returns per unit of risk. Icon Financial Fund is currently generating about 0.01 per unit of risk. If you would invest  1,042  in Copeland Risk Managed on September 20, 2024 and sell it today you would earn a total of  86.00  from holding Copeland Risk Managed or generate 8.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Copeland Risk Managed  vs.  Icon Financial Fund

Copeland Risk Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copeland Risk Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Icon Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Financial Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Copeland Risk and Icon Financial

The main advantage of trading using opposite Copeland Risk and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copeland Risk 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.

The idea behind Copeland Risk Managed and Icon Financial 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.