Correlation Between Icon Financial and Oak Ridge

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

Diversification Opportunities for Icon Financial and Oak Ridge

0.72

Correlation Coefficient

Icon Financial  Oak Ridge

Poor diversification

The 3 months correlation between Icon and Oak is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and Oak Ridge Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Ridge Dynamic 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 Oak Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Ridge Dynamic has no effect on the direction of Icon Financial i.e., Icon Financial and Oak Ridge go up and down completely randomly.

Pair Corralation between Icon Financial and Oak Ridge

Assuming the 90 days horizon Icon Financial Fund is expected to under-perform the Oak Ridge. In addition to that, Icon Financial is 1.72 times more volatile than Oak Ridge Dynamic. It trades about -0.04 of its total potential returns per unit of risk. Oak Ridge Dynamic is currently generating about 0.16 per unit of volatility. If you would invest  1,539  in Oak Ridge Dynamic on September 3, 2024 and sell it today you would earn a total of  192.00  from holding Oak Ridge Dynamic or generate 12.48% return on investment over 90 days.

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

Icon Financial Fund  vs.  Oak Ridge Dynamic

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 fairly strong basic indicators, Icon Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oak Ridge Dynamic

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Ridge Dynamic are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Oak Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Icon Financial and Oak Ridge

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

The idea behind Icon Financial Fund and Oak Ridge Dynamic 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.