Correlation Between Cardano and ICON Project

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

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

Diversification Opportunities for Cardano and ICON Project

0.9

Correlation Coefficient

Cardano  ICON Project

Almost no diversification

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

Pair Corralation between Cardano and ICON Project

Assuming the 90 days trading horizon Cardano is expected to generate 0.81 times more return on investment than ICON Project. However, Cardano is 1.24 times less risky than ICON Project. It trades about -0.08 of its potential returns per unit of risk. ICON Project is currently generating about -0.09 per unit of risk. If you would invest  103.00  in Cardano on November 27, 2024 and sell it today you would lose (35.00) from holding Cardano or give up 33.98% of portfolio value over 90 days.

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

Cardano  vs.  ICON Project

Cardano

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cardano 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 Crypto's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for Cardano shareholders.

ICON Project

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICON Project 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 Crypto's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for ICON Project shareholders.

Pair Trading with Cardano and ICON Project

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

The idea behind Cardano and ICON Project 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.