Correlation Between Western Acquisition and Icon Energy

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

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

Diversification Opportunities for Western Acquisition and Icon Energy

-0.19

Correlation Coefficient

Western Acquisition  Icon Energy

Good diversification

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

Pair Corralation between Western Acquisition and Icon Energy

Given the investment horizon of 90 days Western Acquisition is expected to generate 2.78 times less return on investment than Icon Energy. But when comparing it to its historical volatility, Western Acquisition Ventures is 4.28 times less risky than Icon Energy. It trades about 0.01 of its potential returns per unit of risk. Icon Energy Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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

Western Acquisition Ventures  vs.  Icon Energy Corp

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.

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.

Pair Trading with Western Acquisition and Icon Energy

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

The idea behind Western Acquisition Ventures and Icon Energy Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.