Correlation Between Icon Media and Atlantic Energy

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

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

Diversification Opportunities for Icon Media and Atlantic Energy

0.06

Correlation Coefficient

Icon Media  Atlantic Energy

Significant diversification

The 3 months correlation between Icon and Atlantic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Icon Media Holdings and Atlantic Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Energy Solutions and Icon Media 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 Media Holdings are associated (or correlated) with Atlantic Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Energy Solutions has no effect on the direction of Icon Media i.e., Icon Media and Atlantic Energy go up and down completely randomly.

Pair Corralation between Icon Media and Atlantic Energy

Given the investment horizon of 90 days Icon Media is expected to generate 1.12 times less return on investment than Atlantic Energy. But when comparing it to its historical volatility, Icon Media Holdings is 1.3 times less risky than Atlantic Energy. It trades about 0.07 of its potential returns per unit of risk. Atlantic Energy Solutions is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.15  in Atlantic Energy Solutions on September 13, 2024 and sell it today you would lose (0.35) from holding Atlantic Energy Solutions or give up 30.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Icon Media Holdings  vs.  Atlantic Energy Solutions

Icon Media Holdings

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Media Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Icon Media displayed solid returns over the last few months and may actually be approaching a breakup point.

Atlantic Energy Solutions

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantic Energy Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Atlantic Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Icon Media and Atlantic Energy

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

The idea behind Icon Media Holdings and Atlantic Energy Solutions 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.