Correlation Between Icon Natural and Brown Advisory

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

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

Diversification Opportunities for Icon Natural and Brown Advisory

0.68

Correlation Coefficient

Icon Natural  Brown Advisory

Poor diversification

The 3 months correlation between Icon and Brown is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Brown Advisory Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Advisory Global and Icon Natural 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 Icon Natural Resources are associated (or correlated) with Brown Advisory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Advisory Global has no effect on the direction of Icon Natural i.e., Icon Natural and Brown Advisory go up and down completely randomly.

Pair Corralation between Icon Natural and Brown Advisory

Assuming the 90 days horizon Icon Natural is expected to generate 1.31 times less return on investment than Brown Advisory. In addition to that, Icon Natural is 2.31 times more volatile than Brown Advisory Global. It trades about 0.04 of its total potential returns per unit of risk. Brown Advisory Global is currently generating about 0.12 per unit of volatility. If you would invest  2,657  in Brown Advisory Global on September 4, 2024 and sell it today you would earn a total of  115.00  from holding Brown Advisory Global or generate 4.33% return on investment over 90 days.

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

Icon Natural Resources  vs.  Brown Advisory Global

Icon Natural Resources

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Natural Resources are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Icon Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brown Advisory Global

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brown Advisory Global are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Brown Advisory is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Icon Natural and Brown Advisory

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

The idea behind Icon Natural Resources and Brown Advisory Global 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.