Correlation Between Icon and Accel Solutions

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

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

Diversification Opportunities for Icon and Accel Solutions

0.48

Correlation Coefficient

Icon  Accel Solutions

Very weak diversification

The 3 months correlation between Icon and Accel is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Icon Group and Accel Solutions Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accel Solutions Group and Icon 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 Group are associated (or correlated) with Accel Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accel Solutions Group has no effect on the direction of Icon i.e., Icon and Accel Solutions go up and down completely randomly.

Pair Corralation between Icon and Accel Solutions

Assuming the 90 days trading horizon Icon is expected to generate 2.86 times less return on investment than Accel Solutions. But when comparing it to its historical volatility, Icon Group is 1.38 times less risky than Accel Solutions. It trades about 0.09 of its potential returns per unit of risk. Accel Solutions Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  10,680  in Accel Solutions Group on September 5, 2024 and sell it today you would earn a total of  2,650  from holding Accel Solutions Group or generate 24.81% return on investment over 90 days.

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

Icon Group  vs.  Accel Solutions Group

Icon Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Icon may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Accel Solutions Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Accel Solutions Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Accel Solutions sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Icon and Accel Solutions

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

The idea behind Icon Group and Accel Solutions Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.