Correlation Between Icon Energy and Western Midstream

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

Diversification Opportunities for Icon Energy and Western Midstream

IconWesternDiversified AwayIconWesternDiversified Away100%
0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Icon and Western is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Icon Energy Corp and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream 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 Western Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of Icon Energy i.e., Icon Energy and Western Midstream go up and down completely randomly.

Pair Corralation between Icon Energy and Western Midstream

Given the investment horizon of 90 days Icon Energy Corp is expected to under-perform the Western Midstream. In addition to that, Icon Energy is 2.54 times more volatile than Western Midstream Partners. It trades about -0.37 of its total potential returns per unit of risk. Western Midstream Partners is currently generating about 0.01 per unit of volatility. If you would invest  3,832  in Western Midstream Partners on September 24, 2024 and sell it today you would earn a total of  4.00  from holding Western Midstream Partners or generate 0.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Icon Energy Corp  vs.  Western Midstream Partners

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-1001020
JavaScript chart by amCharts 3.21.15ICON WES
       Timeline  
Icon Energy Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Icon Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Icon Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1.822.22.42.62.833.2
Western Midstream 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Western Midstream Partners are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Western Midstream is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec363738394041

Icon Energy and Western Midstream Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.05-6.03-4.01-1.990.01.933.945.947.949.94 0.050.100.15
JavaScript chart by amCharts 3.21.15ICON WES
       Returns  

Pair Trading with Icon Energy and Western Midstream

The main advantage of trading using opposite Icon Energy and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Energy position performs unexpectedly, Western Midstream 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 Western Midstream will offset losses from the drop in Western Midstream's long position.
The idea behind Icon Energy Corp and Western Midstream Partners 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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