Correlation Between Loews Corp and Icon Energy

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

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

Diversification Opportunities for Loews Corp and Icon Energy

0.72

Correlation Coefficient

Loews Corp  Icon Energy

Poor diversification

The 3 months correlation between Loews and Icon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Icon Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Energy Corp and Loews Corp 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 Loews Corp are associated (or correlated) with Icon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Energy Corp has no effect on the direction of Loews Corp i.e., Loews Corp and Icon Energy go up and down completely randomly.

Pair Corralation between Loews Corp and Icon Energy

Taking into account the 90-day investment horizon Loews Corp is expected to generate 0.22 times more return on investment than Icon Energy. However, Loews Corp is 4.56 times less risky than Icon Energy. It trades about 0.07 of its potential returns per unit of risk. Icon Energy Corp is currently generating about -0.06 per unit of risk. If you would invest  5,853  in Loews Corp on October 11, 2024 and sell it today you would earn a total of  2,500  from holding Loews Corp or generate 42.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	25.25%
Values	Daily Returns

Loews Corp  vs.  Icon Energy Corp

Loews Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Loews Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Icon Energy Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Energy Corp are ranked lower than 3 (%) 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.

Pair Trading with Loews Corp and Icon Energy

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

The idea behind Loews Corp and Icon Energy Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..