Correlation Between Atlantic Energy and Icon Media

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

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

Diversification Opportunities for Atlantic Energy and Icon Media

0.33

Correlation Coefficient

Atlantic Energy  Icon Media

Weak diversification

The 3 months correlation between Atlantic and Icon is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Energy Solutions and Icon Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Media Holdings and Atlantic Energy 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 Atlantic Energy Solutions are associated (or correlated) with Icon Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Media Holdings has no effect on the direction of Atlantic Energy i.e., Atlantic Energy and Icon Media go up and down completely randomly.

Pair Corralation between Atlantic Energy and Icon Media

Given the investment horizon of 90 days Atlantic Energy is expected to generate 1.06 times less return on investment than Icon Media. In addition to that, Atlantic Energy is 1.04 times more volatile than Icon Media Holdings. It trades about 0.08 of its total potential returns per unit of risk. Icon Media Holdings is currently generating about 0.09 per unit of volatility. If you would invest  0.04  in Icon Media Holdings on October 24, 2024 and sell it today you would lose (0.01) from holding Icon Media Holdings or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.8%
Values	Daily Returns

Atlantic Energy Solutions  vs.  Icon Media Holdings

Atlantic Energy Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Energy Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Atlantic Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Icon Media Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Media Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Icon Media displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlantic Energy and Icon Media

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

The idea behind Atlantic Energy Solutions and Icon Media Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..