Correlation Between Icon Utilities and Utilities Fund

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

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

Diversification Opportunities for Icon Utilities and Utilities Fund

0.9

Correlation Coefficient

Icon Utilities  Utilities Fund

Almost no diversification

The 3 months correlation between Icon and Utilities is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Icon Utilities And and Utilities Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Fund Class and Icon Utilities 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 Utilities And are associated (or correlated) with Utilities Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Fund Class has no effect on the direction of Icon Utilities i.e., Icon Utilities and Utilities Fund go up and down completely randomly.

Pair Corralation between Icon Utilities and Utilities Fund

Assuming the 90 days horizon Icon Utilities And is expected to under-perform the Utilities Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Icon Utilities And is 1.33 times less risky than Utilities Fund. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Utilities Fund Class is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  5,244  in Utilities Fund Class on September 16, 2024 and sell it today you would lose (97.00) from holding Utilities Fund Class or give up 1.85% of portfolio value over 90 days.

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

Icon Utilities And  vs.  Utilities Fund Class

Icon Utilities And

Risk-Adjusted Performance

0 of 100

Very Weak

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

Utilities Fund Class

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Icon Utilities and Utilities Fund

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

The idea behind Icon Utilities And and Utilities Fund Class 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.