Correlation Between Mativ Holdings and Icon Energy

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

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

Diversification Opportunities for Mativ Holdings and Icon Energy

-0.4

Correlation Coefficient

Mativ Holdings  Icon Energy

Very good diversification

The 3 months correlation between Mativ and Icon is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings 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 Mativ Holdings 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 Mativ Holdings 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 Mativ Holdings i.e., Mativ Holdings and Icon Energy go up and down completely randomly.

Pair Corralation between Mativ Holdings and Icon Energy

Given the investment horizon of 90 days Mativ Holdings is expected to generate 0.81 times more return on investment than Icon Energy. However, Mativ Holdings is 1.23 times less risky than Icon Energy. It trades about -0.05 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  1,696  in Mativ Holdings on September 19, 2024 and sell it today you would lose (515.00) from holding Mativ Holdings or give up 30.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.8%
Values	Daily Returns

Mativ Holdings  vs.  Icon Energy Corp

Mativ Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Icon Energy Corp

Risk-Adjusted Performance

0 of 100

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 newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mativ Holdings and Icon Energy

The main advantage of trading using opposite Mativ Holdings and Icon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mativ Holdings 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 Mativ Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.