Correlation Between Icon Financial and Global Technology

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

By analyzing existing cross correlation between Icon Financial Fund and Global Technology Portfolio, you can compare the effects of market volatilities on Icon Financial and Global Technology 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 Financial with a short position of Global Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Global Technology.

Diversification Opportunities for Icon Financial and Global Technology

-0.34

Correlation Coefficient

Icon Financial  Global Technology

Very good diversification

The 3 months correlation between Icon and Global is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology and Icon Financial 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 Financial Fund are associated (or correlated) with Global Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Technology has no effect on the direction of Icon Financial i.e., Icon Financial and Global Technology go up and down completely randomly.

Pair Corralation between Icon Financial and Global Technology

Assuming the 90 days horizon Icon Financial Fund is expected to under-perform the Global Technology. In addition to that, Icon Financial is 4.06 times more volatile than Global Technology Portfolio. It trades about -0.18 of its total potential returns per unit of risk. Global Technology Portfolio is currently generating about 0.22 per unit of volatility. If you would invest  2,094  in Global Technology Portfolio on September 19, 2024 and sell it today you would earn a total of  79.00  from holding Global Technology Portfolio or generate 3.77% return on investment over 90 days.

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

Icon Financial Fund  vs.  Global Technology Portfolio

Icon Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Financial Fund 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.

Global Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Technology Portfolio are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unfluctuating basic indicators, Global Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Icon Financial and Global Technology

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

The idea behind Icon Financial Fund and Global Technology Portfolio 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.