Correlation Between Mesirow Financial and Icon Financial

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

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

Diversification Opportunities for Mesirow Financial and Icon Financial

0.9

Correlation Coefficient

Mesirow Financial  Icon Financial

Almost no diversification

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

Pair Corralation between Mesirow Financial and Icon Financial

Assuming the 90 days horizon Mesirow Financial is expected to generate 1.12 times less return on investment than Icon Financial. In addition to that, Mesirow Financial is 1.03 times more volatile than Icon Financial Fund. It trades about 0.19 of its total potential returns per unit of risk. Icon Financial Fund is currently generating about 0.22 per unit of volatility. If you would invest  1,085  in Icon Financial Fund on August 31, 2024 and sell it today you would earn a total of  68.00  from holding Icon Financial Fund or generate 6.27% return on investment over 90 days.

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

Mesirow Financial Small  vs.  Icon Financial Fund

Mesirow Financial Small

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mesirow Financial Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mesirow Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Icon Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Financial Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Icon Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Mesirow Financial and Icon Financial

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

The idea behind Mesirow Financial Small and Icon Financial Fund 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.