Correlation Between Icon Natural and First Trust
Can any of the company-specific risk be diversified away by investing in both Icon Natural and First Trust 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 Natural and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Natural Resources and First Trust Preferred, you can compare the effects of market volatilities on Icon Natural and First Trust 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 Natural with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and First Trust.
Diversification Opportunities for Icon Natural and First Trust
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Icon and First is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and First Trust Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Preferred and Icon Natural 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 Natural Resources are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Preferred has no effect on the direction of Icon Natural i.e., Icon Natural and First Trust go up and down completely randomly.
Pair Corralation between Icon Natural and First Trust
Assuming the 90 days horizon Icon Natural Resources is expected to generate 9.92 times more return on investment than First Trust. However, Icon Natural is 9.92 times more volatile than First Trust Preferred. It trades about 0.21 of its potential returns per unit of risk. First Trust Preferred is currently generating about 0.47 per unit of risk. If you would invest 1,388 in Icon Natural Resources on April 7, 2025 and sell it today you would earn a total of 331.00 from holding Icon Natural Resources or generate 23.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Natural Resources vs. First Trust Preferred
Performance |
| Timeline |
| Icon Natural Resources |
| First Trust Preferred |
Icon Natural and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and First Trust
The main advantage of trading using opposite Icon Natural and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Icon Natural vs. Ab Municipal Bond | Icon Natural vs. Prudential National Muni | Icon Natural vs. Lord Abbett Intermediate | Icon Natural vs. Equalize Community Development |
| First Trust vs. Gabelli Esg Fund | First Trust vs. Icon Natural Resources | First Trust vs. Environment And Alternative | First Trust vs. Dreyfus Natural Resources |
Check out your portfolio center.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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