Correlation Between Icon Financial and William Blair

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

Diversification Opportunities for Icon Financial and William Blair

0.64

Correlation Coefficient

Icon Financial  William Blair

Poor diversification

The 3 months correlation between Icon and William is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund and William Blair Emerg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Emerg 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 William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Emerg has no effect on the direction of Icon Financial i.e., Icon Financial and William Blair go up and down completely randomly.

Pair Corralation between Icon Financial and William Blair

Assuming the 90 days horizon Icon Financial Fund is expected to generate 0.95 times more return on investment than William Blair. However, Icon Financial Fund is 1.06 times less risky than William Blair. It trades about -0.04 of its potential returns per unit of risk. William Blair Emerg is currently generating about -0.09 per unit of risk. If you would invest  952.00  in Icon Financial Fund on December 28, 2024 and sell it today you would lose (28.00) from holding Icon Financial Fund or give up 2.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Icon Financial Fund  vs.  William Blair Emerg

Icon Financial

Risk-Adjusted Performance

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.

William Blair Emerg

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Blair Emerg has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, William Blair 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 William Blair

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

The idea behind Icon Financial Fund and William Blair Emerg 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.