Correlation Between All American and ICOA

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

By analyzing existing cross correlation between All American Pet and ICOA Inc, you can compare the effects of market volatilities on All American and ICOA 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 All American with a short position of ICOA. Check out your portfolio center. Please also check ongoing floating volatility patterns of All American and ICOA.

Diversification Opportunities for All American and ICOA

-0.45

Correlation Coefficient

All American  ICOA

Very good diversification

The 3 months correlation between All and ICOA is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding All American Pet and ICOA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICOA Inc and All American 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 All American Pet are associated (or correlated) with ICOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICOA Inc has no effect on the direction of All American i.e., All American and ICOA go up and down completely randomly.

Pair Corralation between All American and ICOA

Given the investment horizon of 90 days All American Pet is expected to under-perform the ICOA. But the pink sheet apears to be less risky and, when comparing its historical volatility, All American Pet is 9.98 times less risky than ICOA. The pink sheet trades about -0.13 of its potential returns per unit of risk. The ICOA Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.01  in ICOA Inc on December 19, 2024 and sell it today you would earn a total of  0.00  from holding ICOA Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

All American Pet  vs.  ICOA Inc

All American Pet

Risk-Adjusted Performance

Very Weak

Over the last 90 days All American Pet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ICOA Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICOA Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, ICOA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with All American and ICOA

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

The idea behind All American Pet and ICOA Inc 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.