Correlation Between Adams Diversified and Icon Financial
Can any of the company-specific risk be diversified away by investing in both Adams Diversified 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 Adams Diversified and Icon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Diversified Equity and Icon Financial Fund, you can compare the effects of market volatilities on Adams Diversified 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 Adams Diversified with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Diversified and Icon Financial.
Diversification Opportunities for Adams Diversified and Icon Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Adams and Icon is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Adams Diversified Equity and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and Adams Diversified 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 Adams Diversified Equity 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 Adams Diversified i.e., Adams Diversified and Icon Financial go up and down completely randomly.
Pair Corralation between Adams Diversified and Icon Financial
Considering the 90-day investment horizon Adams Diversified Equity is expected to under-perform the Icon Financial. But the fund apears to be less risky and, when comparing its historical volatility, Adams Diversified Equity is 1.04 times less risky than Icon Financial. The fund trades about -0.06 of its potential returns per unit of risk. The Icon Financial Fund is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 962.00 in Icon Financial Fund on December 27, 2024 and sell it today you would lose (31.00) from holding Icon Financial Fund or give up 3.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Adams Diversified Equity vs. Icon Financial Fund
Performance |
Timeline |
Adams Diversified Equity |
Icon Financial |
Adams Diversified and Icon Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Adams Diversified and Icon Financial
The main advantage of trading using opposite Adams Diversified and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Diversified 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.Adams Diversified vs. Tri Continental Closed | Adams Diversified vs. SRH Total Return | Adams Diversified vs. Putnam Municipal Opportunities | Adams Diversified vs. Liberty All Star |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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