Correlation Between Costamare and Icon Energy

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

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

Diversification Opportunities for Costamare and Icon Energy

-0.56

Correlation Coefficient

Costamare  Icon Energy

Excellent diversification

The 3 months correlation between Costamare and Icon is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Costamare and Icon Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Energy Corp and Costamare 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 Costamare are associated (or correlated) with Icon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Energy Corp has no effect on the direction of Costamare i.e., Costamare and Icon Energy go up and down completely randomly.

Pair Corralation between Costamare and Icon Energy

Assuming the 90 days trading horizon Costamare is expected to under-perform the Icon Energy. But the preferred stock apears to be less risky and, when comparing its historical volatility, Costamare is 11.24 times less risky than Icon Energy. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Icon Energy Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Icon Energy Corp on September 12, 2024 and sell it today you would earn a total of  85.00  from holding Icon Energy Corp or generate 36.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Costamare  vs.  Icon Energy Corp

Costamare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Costamare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Costamare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Icon Energy Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Icon Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Costamare and Icon Energy

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

The idea behind Costamare and Icon Energy Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.