Correlation Between American States and Icon Utilities

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

By analyzing existing cross correlation between American States Water and Icon Utilities And, you can compare the effects of market volatilities on American States and Icon Utilities 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 American States with a short position of Icon Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of American States and Icon Utilities.

Diversification Opportunities for American States and Icon Utilities

0.7

Correlation Coefficient

American States  Icon Utilities

Poor diversification

The 3 months correlation between American and Icon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding American States Water and Icon Utilities And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Utilities And and American States 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 American States Water are associated (or correlated) with Icon Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Utilities And has no effect on the direction of American States i.e., American States and Icon Utilities go up and down completely randomly.

Pair Corralation between American States and Icon Utilities

Considering the 90-day investment horizon American States is expected to generate 11.23 times less return on investment than Icon Utilities. In addition to that, American States is 1.69 times more volatile than Icon Utilities And. It trades about 0.01 of its total potential returns per unit of risk. Icon Utilities And is currently generating about 0.18 per unit of volatility. If you would invest  938.00  in Icon Utilities And on December 29, 2024 and sell it today you would earn a total of  96.00  from holding Icon Utilities And or generate 10.23% return on investment over 90 days.

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

American States Water  vs.  Icon Utilities And

American States Water

Risk-Adjusted Performance

Very Weak

Over the last 90 days American States Water has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, American States is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Icon Utilities And

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Utilities And are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Icon Utilities may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with American States and Icon Utilities

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

The idea behind American States Water and Icon Utilities And 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.