Correlation Between ICOA and One World

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

By analyzing existing cross correlation between ICOA Inc and One World Universe, you can compare the effects of market volatilities on ICOA and One World 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 ICOA with a short position of One World. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICOA and One World.

Diversification Opportunities for ICOA and One World

-0.04

Correlation Coefficient

ICOA  One World

Good diversification

The 3 months correlation between ICOA and One is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ICOA Inc and One World Universe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One World Universe and ICOA 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 ICOA Inc are associated (or correlated) with One World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One World Universe has no effect on the direction of ICOA i.e., ICOA and One World go up and down completely randomly.

Pair Corralation between ICOA and One World

Given the investment horizon of 90 days ICOA Inc is expected to generate 6.85 times more return on investment than One World. However, ICOA is 6.85 times more volatile than One World Universe. It trades about 0.09 of its potential returns per unit of risk. One World Universe is currently generating about 0.03 per unit of risk. If you would invest  0.09  in ICOA Inc on October 23, 2024 and sell it today you would lose (0.08) from holding ICOA Inc or give up 88.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

ICOA Inc  vs.  One World Universe

ICOA Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ICOA Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, ICOA sustained solid returns over the last few months and may actually be approaching a breakup point.

One World Universe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days One World Universe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, One World is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ICOA and One World

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

The idea behind ICOA Inc and One World Universe 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.