Correlation Between Icon Natural and Voya Solution

Can any of the company-specific risk be diversified away by investing in both Icon Natural and Voya Solution 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 Voya Solution 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 Voya Solution 2060, you can compare the effects of market volatilities on Icon Natural and Voya Solution 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 Voya Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Voya Solution.

Diversification Opportunities for Icon Natural and Voya Solution

-0.02

Correlation Coefficient

Icon Natural  Voya Solution

Good diversification

The 3 months correlation between Icon and Voya is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Voya Solution 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution 2060 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 Voya Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Solution 2060 has no effect on the direction of Icon Natural i.e., Icon Natural and Voya Solution go up and down completely randomly.

Pair Corralation between Icon Natural and Voya Solution

Assuming the 90 days horizon Icon Natural is expected to generate 90.13 times less return on investment than Voya Solution. But when comparing it to its historical volatility, Icon Natural Resources is 39.36 times less risky than Voya Solution. It trades about 0.07 of its potential returns per unit of risk. Voya Solution 2060 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,046  in Voya Solution 2060 on October 9, 2024 and sell it today you would lose (646.00) from holding Voya Solution 2060 or give up 61.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.94%
Values	Daily Returns

Icon Natural Resources  vs.  Voya Solution 2060

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.

Voya Solution 2060

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Solution 2060 has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Icon Natural and Voya Solution

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

The idea behind Icon Natural Resources and Voya Solution 2060 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.