Correlation Between Icon Energy and Western Acquisition

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

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

Diversification Opportunities for Icon Energy and Western Acquisition

-0.19

Correlation Coefficient

Icon Energy  Western Acquisition

Good diversification

The 3 months correlation between Icon and Western is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Icon Energy Corp and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition and Icon Energy 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 Energy Corp are associated (or correlated) with Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Icon Energy i.e., Icon Energy and Western Acquisition go up and down completely randomly.

Pair Corralation between Icon Energy and Western Acquisition

Given the investment horizon of 90 days Icon Energy Corp is expected to generate 4.28 times more return on investment than Western Acquisition. However, Icon Energy is 4.28 times more volatile than Western Acquisition Ventures. It trades about 0.01 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.01 per unit of risk. If you would invest  358.00  in Icon Energy Corp on September 14, 2024 and sell it today you would lose (43.00) from holding Icon Energy Corp or give up 12.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.52%
Values	Daily Returns

Icon Energy Corp  vs.  Western Acquisition Ventures

Icon Energy Corp

Risk-Adjusted Performance

8 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Icon Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Western Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Western Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Icon Energy and Western Acquisition

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

The idea behind Icon Energy Corp and Western Acquisition Ventures 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.