Correlation Between Financial Services and Icon Financial
Can any of the company-specific risk be diversified away by investing in both Financial Services and Icon Financial 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 Financial Services and Icon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Services Fund and Icon Financial Fund, you can compare the effects of market volatilities on Financial Services and Icon Financial 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 Financial Services with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Services and Icon Financial.
Diversification Opportunities for Financial Services and Icon Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Financial and Icon is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Financial Services Fund and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and Financial Services 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 Financial Services Fund are associated (or correlated) with Icon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Financial has no effect on the direction of Financial Services i.e., Financial Services and Icon Financial go up and down completely randomly.
Pair Corralation between Financial Services and Icon Financial
Assuming the 90 days horizon Financial Services is expected to generate 1.1 times less return on investment than Icon Financial. But when comparing it to its historical volatility, Financial Services Fund is 1.12 times less risky than Icon Financial. It trades about 0.14 of its potential returns per unit of risk. Icon Financial Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 939.00 in Icon Financial Fund on May 30, 2025 and sell it today you would earn a total of 72.00 from holding Icon Financial Fund or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Services Fund vs. Icon Financial Fund
Performance |
| Timeline |
| Financial Services |
| Icon Financial |
Financial Services and Icon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Services and Icon Financial
The main advantage of trading using opposite Financial Services and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Services position performs unexpectedly, Icon Financial 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 Financial will offset losses from the drop in Icon Financial's long position.| Financial Services vs. Columbia Diversified Equity | Financial Services vs. Guidepath Conservative Income | Financial Services vs. Victory Diversified Stock | Financial Services vs. Global Diversified Income |
| Icon Financial vs. Touchstone International Equity | Icon Financial vs. Dodge International Stock | Icon Financial vs. Ab Select Equity | Icon Financial vs. Ultra Short Fixed Income |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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