Correlation Between Icon Financial and Catalyst/millburn

Can any of the company-specific risk be diversified away by investing in both Icon Financial and Catalyst/millburn 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 Catalyst/millburn 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 Catalystmillburn Hedge Strategy, you can compare the effects of market volatilities on Icon Financial and Catalyst/millburn 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 Catalyst/millburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and Catalyst/millburn.

Diversification Opportunities for Icon Financial and Catalyst/millburn

0.16

Correlation Coefficient

Icon Financial  Catalyst/millburn

Average diversification

The 3 months correlation between Icon and Catalyst/millburn is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge 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 Catalyst/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of Icon Financial i.e., Icon Financial and Catalyst/millburn go up and down completely randomly.

Pair Corralation between Icon Financial and Catalyst/millburn

Assuming the 90 days horizon Icon Financial Fund is expected to under-perform the Catalyst/millburn. In addition to that, Icon Financial is 1.04 times more volatile than Catalystmillburn Hedge Strategy. It trades about -0.18 of its total potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about -0.15 per unit of volatility. If you would invest  4,051  in Catalystmillburn Hedge Strategy on October 9, 2024 and sell it today you would lose (102.00) from holding Catalystmillburn Hedge Strategy or give up 2.52% of portfolio value over 90 days.

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

Icon Financial Fund  vs.  Catalystmillburn Hedge Strateg

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.

Catalystmillburn Hedge

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Hedge Strategy are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Catalyst/millburn is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Icon Financial and Catalyst/millburn

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

The idea behind Icon Financial Fund and Catalystmillburn Hedge Strategy 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.