Correlation Between Icon Financial and Prudential Jennison

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

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

Diversification Opportunities for Icon Financial and Prudential Jennison

0.74

Correlation Coefficient

Icon Financial  Prudential Jennison

Poor diversification

The 3 months correlation between Icon and Prudential is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Prudential Jennison Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Value and Icon Financial 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 Financial Fund are associated (or correlated) with Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison Value has no effect on the direction of Icon Financial i.e., Icon Financial and Prudential Jennison go up and down completely randomly.

Pair Corralation between Icon Financial and Prudential Jennison

Assuming the 90 days horizon Icon Financial Fund is expected to under-perform the Prudential Jennison. In addition to that, Icon Financial is 3.12 times more volatile than Prudential Jennison Value. It trades about -0.04 of its total potential returns per unit of risk. Prudential Jennison Value is currently generating about 0.19 per unit of volatility. If you would invest  2,341  in Prudential Jennison Value on September 2, 2024 and sell it today you would earn a total of  197.00  from holding Prudential Jennison Value or generate 8.42% return on investment over 90 days.

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

Icon Financial Fund  vs.  Prudential Jennison Value

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 fairly strong basic indicators, Icon Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Jennison Value

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Value are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Jennison may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Icon Financial and Prudential Jennison

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

The idea behind Icon Financial Fund and Prudential Jennison Value 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.