Correlation Between Icon Utilities and Utilities Fund

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

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

Diversification Opportunities for Icon Utilities and Utilities Fund

0.91

Correlation Coefficient

Icon Utilities  Utilities Fund

Almost no diversification

The 3 months correlation between Icon and Utilities is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Icon Utilities And and Utilities Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Fund Class and Icon Utilities 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 Utilities And are associated (or correlated) with Utilities Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Fund Class has no effect on the direction of Icon Utilities i.e., Icon Utilities and Utilities Fund go up and down completely randomly.

Pair Corralation between Icon Utilities and Utilities Fund

Assuming the 90 days horizon Icon Utilities is expected to generate 1.34 times less return on investment than Utilities Fund. But when comparing it to its historical volatility, Icon Utilities And is 1.32 times less risky than Utilities Fund. It trades about 0.15 of its potential returns per unit of risk. Utilities Fund Class is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  5,060  in Utilities Fund Class on August 31, 2024 and sell it today you would earn a total of  466.00  from holding Utilities Fund Class or generate 9.21% return on investment over 90 days.

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

Icon Utilities And  vs.  Utilities Fund Class

Icon Utilities And

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Utilities And are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Icon Utilities may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Utilities Fund Class

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Utilities Fund Class are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Utilities Fund may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Icon Utilities and Utilities Fund

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

The idea behind Icon Utilities And and Utilities Fund Class 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.