Correlation Between Icon Information and Technology Ultrasector

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Icon Information and Technology Ultrasector 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 Information and Technology Ultrasector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Information Technology and Technology Ultrasector Profund, you can compare the effects of market volatilities on Icon Information and Technology Ultrasector 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 Information with a short position of Technology Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Information and Technology Ultrasector.

Diversification Opportunities for Icon Information and Technology Ultrasector

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Icon and TECHNOLOGY is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Icon Information Technology and Technology Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Ultrasector and Icon Information 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 Information Technology are associated (or correlated) with Technology Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Ultrasector has no effect on the direction of Icon Information i.e., Icon Information and Technology Ultrasector go up and down completely randomly.

Pair Corralation between Icon Information and Technology Ultrasector

Assuming the 90 days horizon Icon Information is expected to generate 3.98 times less return on investment than Technology Ultrasector. But when comparing it to its historical volatility, Icon Information Technology is 1.96 times less risky than Technology Ultrasector. It trades about 0.06 of its potential returns per unit of risk. Technology Ultrasector Profund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,730  in Technology Ultrasector Profund on August 31, 2024 and sell it today you would earn a total of  381.00  from holding Technology Ultrasector Profund or generate 13.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Icon Information Technology  vs.  Technology Ultrasector Profund

 Performance 
       Timeline  
Icon Information Tec 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Icon Information Technology are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Icon Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Technology Ultrasector 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Technology Ultrasector Profund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Technology Ultrasector showed solid returns over the last few months and may actually be approaching a breakup point.

Icon Information and Technology Ultrasector Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Icon Information and Technology Ultrasector

The main advantage of trading using opposite Icon Information and Technology Ultrasector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Information position performs unexpectedly, Technology Ultrasector 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 Technology Ultrasector will offset losses from the drop in Technology Ultrasector's long position.
The idea behind Icon Information Technology and Technology Ultrasector Profund 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

Other Complementary Tools

Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Share Portfolio
Track or share privately all of your investments from the convenience of any device