Correlation Between Icad and Shimano

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

By analyzing existing cross correlation between icad inc and Shimano Inc ADR, you can compare the effects of market volatilities on Icad and Shimano 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 Icad with a short position of Shimano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icad and Shimano.

Diversification Opportunities for Icad and Shimano

0.15

Correlation Coefficient

Icad  Shimano

Average diversification

The 3 months correlation between Icad and Shimano is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding icad inc and Shimano Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano Inc ADR and Icad 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 icad inc are associated (or correlated) with Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano Inc ADR has no effect on the direction of Icad i.e., Icad and Shimano go up and down completely randomly.

Pair Corralation between Icad and Shimano

Given the investment horizon of 90 days icad inc is expected to under-perform the Shimano. In addition to that, Icad is 4.57 times more volatile than Shimano Inc ADR. It trades about -0.19 of its total potential returns per unit of risk. Shimano Inc ADR is currently generating about -0.07 per unit of volatility. If you would invest  1,380  in Shimano Inc ADR on December 4, 2024 and sell it today you would lose (29.00) from holding Shimano Inc ADR or give up 2.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

icad inc  vs.  Shimano Inc ADR

icad inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in icad inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Icad exhibited solid returns over the last few months and may actually be approaching a breakup point.

Shimano Inc ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shimano Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Shimano is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Icad and Shimano

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

The idea behind icad inc and Shimano Inc ADR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.