Correlation Between Icon Natural and Ubs Emerging

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

By analyzing existing cross correlation between Icon Natural Resources and Ubs Emerging Markets, you can compare the effects of market volatilities on Icon Natural and Ubs Emerging 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 Icon Natural with a short position of Ubs Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Ubs Emerging.

Diversification Opportunities for Icon Natural and Ubs Emerging

0.42

Correlation Coefficient

Icon Natural  Ubs Emerging

Very weak diversification

The 3 months correlation between Icon and Ubs is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Ubs Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Emerging Markets and Icon Natural 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 Icon Natural Resources are associated (or correlated) with Ubs Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Emerging Markets has no effect on the direction of Icon Natural i.e., Icon Natural and Ubs Emerging go up and down completely randomly.

Pair Corralation between Icon Natural and Ubs Emerging

Assuming the 90 days horizon Icon Natural Resources is expected to under-perform the Ubs Emerging. In addition to that, Icon Natural is 1.24 times more volatile than Ubs Emerging Markets. It trades about 0.0 of its total potential returns per unit of risk. Ubs Emerging Markets is currently generating about 0.0 per unit of volatility. If you would invest  748.00  in Ubs Emerging Markets on October 22, 2024 and sell it today you would lose (3.00) from holding Ubs Emerging Markets or give up 0.4% of portfolio value over 90 days.

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

Icon Natural Resources  vs.  Ubs Emerging Markets

Icon Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ubs Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubs Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Icon Natural and Ubs Emerging

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

The idea behind Icon Natural Resources and Ubs Emerging Markets 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.