Correlation Between Icon Equity and Carillon Chartwell

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

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

Diversification Opportunities for Icon Equity and Carillon Chartwell

0.83

Correlation Coefficient

Icon Equity  Carillon Chartwell

Very poor diversification

The 3 months correlation between ICON and Carillon is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Icon Equity Income and Carillon Chartwell Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Chartwell Small and Icon Equity 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 Equity Income are associated (or correlated) with Carillon Chartwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Chartwell Small has no effect on the direction of Icon Equity i.e., Icon Equity and Carillon Chartwell go up and down completely randomly.

Pair Corralation between Icon Equity and Carillon Chartwell

Assuming the 90 days horizon Icon Equity is expected to generate 4.15 times less return on investment than Carillon Chartwell. But when comparing it to its historical volatility, Icon Equity Income is 1.83 times less risky than Carillon Chartwell. It trades about 0.07 of its potential returns per unit of risk. Carillon Chartwell Small is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,033  in Carillon Chartwell Small on August 31, 2024 and sell it today you would earn a total of  250.00  from holding Carillon Chartwell Small or generate 12.3% return on investment over 90 days.

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

Icon Equity Income  vs.  Carillon Chartwell Small

Icon Equity Income

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Equity Income are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Icon Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Carillon Chartwell Small

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carillon Chartwell Small are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Carillon Chartwell may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Icon Equity and Carillon Chartwell

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

The idea behind Icon Equity Income and Carillon Chartwell Small 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.