Correlation Between Avalanche and ICON Project

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

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

Diversification Opportunities for Avalanche and ICON Project

0.83

Correlation Coefficient

Avalanche  ICON Project

Very poor diversification

The 3 months correlation between Avalanche and ICON is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and ICON Project in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON Project and Avalanche 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 Avalanche 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 Avalanche i.e., Avalanche and ICON Project go up and down completely randomly.

Pair Corralation between Avalanche and ICON Project

Assuming the 90 days trading horizon Avalanche is expected to under-perform the ICON Project. But the crypto coin apears to be less risky and, when comparing its historical volatility, Avalanche is 1.17 times less risky than ICON Project. The crypto coin trades about -0.13 of its potential returns per unit of risk. The ICON Project is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  22.00  in ICON Project on November 27, 2024 and sell it today you would lose (10.00) from holding ICON Project or give up 45.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Avalanche  vs.  ICON Project

Avalanche

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avalanche 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 fundamental 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 Avalanche 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 Avalanche and ICON Project

The main advantage of trading using opposite Avalanche and ICON Project positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalanche 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 Avalanche 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.