Correlation Between ICON PLC and Aclaris Therapeutics

Can any of the company-specific risk be diversified away by investing in both ICON PLC and Aclaris Therapeutics 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 PLC and Aclaris Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for ICON PLC and Aclaris Therapeutics

-0.78

Correlation Coefficient

ICON PLC  Aclaris Therapeutics

Pay attention - limited upside

The 3 months correlation between ICON and Aclaris is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding ICON PLC and Aclaris Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aclaris Therapeutics and ICON PLC 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 PLC are associated (or correlated) with Aclaris Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aclaris Therapeutics has no effect on the direction of ICON PLC i.e., ICON PLC and Aclaris Therapeutics go up and down completely randomly.

Pair Corralation between ICON PLC and Aclaris Therapeutics

Given the investment horizon of 90 days ICON PLC is expected to generate 0.3 times more return on investment than Aclaris Therapeutics. However, ICON PLC is 3.28 times less risky than Aclaris Therapeutics. It trades about -0.1 of its potential returns per unit of risk. Aclaris Therapeutics is currently generating about -0.35 per unit of risk. If you would invest  21,676  in ICON PLC on September 25, 2024 and sell it today you would lose (674.00) from holding ICON PLC or give up 3.11% of portfolio value over 90 days.

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

ICON PLC  vs.  Aclaris Therapeutics

ICON PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICON PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Aclaris Therapeutics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aclaris Therapeutics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Aclaris Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICON PLC and Aclaris Therapeutics

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

The idea behind ICON PLC and Aclaris Therapeutics 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.