Correlation Between ICC Holdings and First American

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

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

Diversification Opportunities for ICC Holdings and First American

-0.26

Correlation Coefficient

ICC Holdings  First American

Very good diversification

The 3 months correlation between ICC and First is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding ICC Holdings and First American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American and ICC Holdings 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 ICC Holdings are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American has no effect on the direction of ICC Holdings i.e., ICC Holdings and First American go up and down completely randomly.

Pair Corralation between ICC Holdings and First American

Given the investment horizon of 90 days ICC Holdings is expected to generate 10.91 times less return on investment than First American. But when comparing it to its historical volatility, ICC Holdings is 2.02 times less risky than First American. It trades about 0.01 of its potential returns per unit of risk. First American is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,201  in First American on December 27, 2024 and sell it today you would earn a total of  374.00  from holding First American or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

ICC Holdings  vs.  First American

ICC Holdings

Risk-Adjusted Performance

Weak

Over the last 90 days ICC Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, ICC Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

First American

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First American are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, First American may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ICC Holdings and First American

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

The idea behind ICC Holdings and First American 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.