Correlation Between Icon Energy and Loandepot

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

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

Diversification Opportunities for Icon Energy and Loandepot

0.06

Correlation Coefficient

Icon Energy  Loandepot

Significant diversification

The 3 months correlation between Icon and Loandepot is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Icon Energy Corp and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot and Icon Energy 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 Energy Corp are associated (or correlated) with Loandepot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loandepot has no effect on the direction of Icon Energy i.e., Icon Energy and Loandepot go up and down completely randomly.

Pair Corralation between Icon Energy and Loandepot

Given the investment horizon of 90 days Icon Energy Corp is expected to generate 1.2 times more return on investment than Loandepot. However, Icon Energy is 1.2 times more volatile than Loandepot. It trades about 0.05 of its potential returns per unit of risk. Loandepot is currently generating about -0.08 per unit of risk. If you would invest  202.00  in Icon Energy Corp on October 3, 2024 and sell it today you would earn a total of  21.00  from holding Icon Energy Corp or generate 10.4% return on investment over 90 days.

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

Icon Energy Corp  vs.  Loandepot

Icon Energy Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Energy Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Icon Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Loandepot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loandepot has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Icon Energy and Loandepot

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

The idea behind Icon Energy Corp and Loandepot 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.