Correlation Between Eyenovia and ICON PLC

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

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

Diversification Opportunities for Eyenovia and ICON PLC

0.66

Correlation Coefficient

Eyenovia  ICON PLC

Poor diversification

The 3 months correlation between Eyenovia and ICON is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Eyenovia and ICON PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON PLC and Eyenovia 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 Eyenovia are associated (or correlated) with ICON PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICON PLC has no effect on the direction of Eyenovia i.e., Eyenovia and ICON PLC go up and down completely randomly.

Pair Corralation between Eyenovia and ICON PLC

Given the investment horizon of 90 days Eyenovia is expected to generate 10.65 times more return on investment than ICON PLC. However, Eyenovia is 10.65 times more volatile than ICON PLC. It trades about 0.1 of its potential returns per unit of risk. ICON PLC is currently generating about -0.13 per unit of risk. If you would invest  9.81  in Eyenovia on October 8, 2024 and sell it today you would earn a total of  1.19  from holding Eyenovia or generate 12.13% return on investment over 90 days.

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

Eyenovia  vs.  ICON PLC

Eyenovia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eyenovia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

ICON PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICON PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Eyenovia and ICON PLC

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

The idea behind Eyenovia and ICON PLC 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.