Correlation Between Oatly Group and Icon Energy

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

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

Diversification Opportunities for Oatly Group and Icon Energy

-0.29

Correlation Coefficient

Oatly Group  Icon Energy

Very good diversification

The 3 months correlation between Oatly and Icon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB 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 Oatly Group 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 Oatly Group AB 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 Oatly Group i.e., Oatly Group and Icon Energy go up and down completely randomly.

Pair Corralation between Oatly Group and Icon Energy

Given the investment horizon of 90 days Oatly Group AB is expected to generate 1.34 times more return on investment than Icon Energy. However, Oatly Group is 1.34 times more volatile than Icon Energy Corp. It trades about 0.24 of its potential returns per unit of risk. Icon Energy Corp is currently generating about -0.04 per unit of risk. If you would invest  64.00  in Oatly Group AB on October 6, 2024 and sell it today you would earn a total of  12.00  from holding Oatly Group AB or generate 18.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Oatly Group AB  vs.  Icon Energy Corp

Oatly Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oatly Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Oatly Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Icon Energy Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Energy Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Icon Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oatly Group and Icon Energy

The main advantage of trading using opposite Oatly Group and Icon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oatly Group 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 Oatly Group AB 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.