Correlation Between Icad and World Technology

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

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

Diversification Opportunities for Icad and World Technology

-0.33

Correlation Coefficient

Icad  World Technology

Very good diversification

The 3 months correlation between Icad and World is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding icad inc and World Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Technology Corp and Icad 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 icad inc are associated (or correlated) with World Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Technology Corp has no effect on the direction of Icad i.e., Icad and World Technology go up and down completely randomly.

Pair Corralation between Icad and World Technology

Given the investment horizon of 90 days Icad is expected to generate 1.39 times less return on investment than World Technology. But when comparing it to its historical volatility, icad inc is 2.09 times less risky than World Technology. It trades about 0.07 of its potential returns per unit of risk. World Technology Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  30.00  in World Technology Corp on September 17, 2024 and sell it today you would earn a total of  0.00  from holding World Technology Corp or generate 0.0% return on investment over 90 days.

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

icad inc  vs.  World Technology Corp

icad inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in icad inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Icad exhibited solid returns over the last few months and may actually be approaching a breakup point.

World Technology Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in World Technology Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, World Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Icad and World Technology

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

The idea behind icad inc and World Technology 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.