Correlation Between Icon Information and Global Strategist

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

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

Diversification Opportunities for Icon Information and Global Strategist

0.13

Correlation Coefficient

Icon Information  Global Strategist

Average diversification

The 3 months correlation between Icon and Global is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Icon Information Technology and Global Strategist Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Strategist and Icon Information 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 Information Technology are associated (or correlated) with Global Strategist. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Strategist has no effect on the direction of Icon Information i.e., Icon Information and Global Strategist go up and down completely randomly.

Pair Corralation between Icon Information and Global Strategist

Assuming the 90 days horizon Icon Information Technology is expected to under-perform the Global Strategist. In addition to that, Icon Information is 2.76 times more volatile than Global Strategist Portfolio. It trades about -0.02 of its total potential returns per unit of risk. Global Strategist Portfolio is currently generating about -0.04 per unit of volatility. If you would invest  1,737  in Global Strategist Portfolio on September 16, 2024 and sell it today you would lose (21.00) from holding Global Strategist Portfolio or give up 1.21% of portfolio value over 90 days.

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

Icon Information Technology  vs.  Global Strategist Portfolio

Icon Information Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Information Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Icon Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global Strategist

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Strategist Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Global Strategist is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Icon Information and Global Strategist

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

The idea behind Icon Information Technology and Global Strategist Portfolio 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.