Correlation Between Spectrum Brands and Icon Energy

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

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

Diversification Opportunities for Spectrum Brands and Icon Energy

0.3

Correlation Coefficient

Spectrum Brands  Icon Energy

Weak diversification

The 3 months correlation between Spectrum and Icon is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands 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 Spectrum Brands 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 Spectrum Brands 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 Spectrum Brands i.e., Spectrum Brands and Icon Energy go up and down completely randomly.

Pair Corralation between Spectrum Brands and Icon Energy

Considering the 90-day investment horizon Spectrum Brands Holdings is expected to generate 0.13 times more return on investment than Icon Energy. However, Spectrum Brands Holdings is 7.88 times less risky than Icon Energy. It trades about 0.08 of its potential returns per unit of risk. Icon Energy Corp is currently generating about -0.12 per unit of risk. If you would invest  8,475  in Spectrum Brands Holdings on October 24, 2024 and sell it today you would earn a total of  78.00  from holding Spectrum Brands Holdings or generate 0.92% return on investment over 90 days.

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

Spectrum Brands Holdings  vs.  Icon Energy Corp

Spectrum Brands Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spectrum Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Spectrum Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Spectrum Brands and Icon Energy

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