Correlation Between Icon Media and Active Health

Can any of the company-specific risk be diversified away by investing in both Icon Media and Active Health 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 Active Health 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 Active Health Foods, you can compare the effects of market volatilities on Icon Media and Active Health 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 Active Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Media and Active Health.

Diversification Opportunities for Icon Media and Active Health

0.07

Correlation Coefficient

Icon Media  Active Health

Significant diversification

The 3 months correlation between Icon and Active is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Icon Media Holdings and Active Health Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Active Health Foods 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 Active Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Active Health Foods has no effect on the direction of Icon Media i.e., Icon Media and Active Health go up and down completely randomly.

Pair Corralation between Icon Media and Active Health

Given the investment horizon of 90 days Icon Media Holdings is expected to generate 0.99 times more return on investment than Active Health. However, Icon Media Holdings is 1.01 times less risky than Active Health. It trades about 0.07 of its potential returns per unit of risk. Active Health Foods is currently generating about -0.18 per unit of risk. If you would invest  0.03  in Icon Media Holdings on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Icon Media Holdings or generate 0.0% return on investment over 90 days.

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

Icon Media Holdings  vs.  Active Health Foods

Icon Media Holdings

Risk-Adjusted Performance

5 of 100

Modest

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 unsteady basic indicators, Icon Media displayed solid returns over the last few months and may actually be approaching a breakup point.

Active Health Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Active Health Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Icon Media and Active Health

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

The idea behind Icon Media Holdings and Active Health Foods 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 Anywhere module to track or share privately all of your investments from the convenience of any device.