Correlation Between ICC Holdings and CaliberCos

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

By analyzing existing cross correlation between ICC Holdings and CaliberCos Class A, you can compare the effects of market volatilities on ICC Holdings and CaliberCos 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 ICC Holdings with a short position of CaliberCos. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICC Holdings and CaliberCos.

Diversification Opportunities for ICC Holdings and CaliberCos

-0.4

Correlation Coefficient

ICC Holdings  CaliberCos

Very good diversification

The 3 months correlation between ICC and CaliberCos is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ICC Holdings and CaliberCos Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaliberCos Class A and ICC Holdings 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 ICC Holdings are associated (or correlated) with CaliberCos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaliberCos Class A has no effect on the direction of ICC Holdings i.e., ICC Holdings and CaliberCos go up and down completely randomly.

Pair Corralation between ICC Holdings and CaliberCos

Given the investment horizon of 90 days ICC Holdings is expected to generate 4.17 times less return on investment than CaliberCos. But when comparing it to its historical volatility, ICC Holdings is 14.13 times less risky than CaliberCos. It trades about 0.12 of its potential returns per unit of risk. CaliberCos Class A is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  50.00  in CaliberCos Class A on September 15, 2024 and sell it today you would earn a total of  0.00  from holding CaliberCos Class A or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

ICC Holdings  vs.  CaliberCos Class A

ICC Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICC Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, ICC Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

CaliberCos Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CaliberCos Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with ICC Holdings and CaliberCos

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

The idea behind ICC Holdings and CaliberCos Class A 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.