Correlation Between Chemours and Icon Energy

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

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

Diversification Opportunities for Chemours and Icon Energy

0.51

Correlation Coefficient

Chemours  Icon Energy

Very weak diversification

The 3 months correlation between Chemours and Icon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Icon Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Energy Corp and Chemours 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 Chemours Co are associated (or correlated) with Icon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Energy Corp has no effect on the direction of Chemours i.e., Chemours and Icon Energy go up and down completely randomly.

Pair Corralation between Chemours and Icon Energy

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Icon Energy. But the stock apears to be less risky and, when comparing its historical volatility, Chemours Co is 1.23 times less risky than Icon Energy. The stock trades about -0.62 of its potential returns per unit of risk. The Icon Energy Corp is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Icon Energy Corp on October 8, 2024 and sell it today you would lose (10.00) from holding Icon Energy Corp or give up 4.35% of portfolio value over 90 days.

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

Chemours Co  vs.  Icon Energy Corp

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Icon Energy Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Energy Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Icon Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chemours and Icon Energy

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

The idea behind Chemours Co and Icon Energy Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..