Correlation Between ICON Project and BRC
Can any of the company-specific risk be diversified away by investing in both ICON Project and BRC 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 Project and BRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICON Project and BRC, you can compare the effects of market volatilities on ICON Project and BRC 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 Project with a short position of BRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON Project and BRC.
Diversification Opportunities for ICON Project and BRC
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ICON and BRC is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ICON Project and BRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRC and ICON Project 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 Project are associated (or correlated) with BRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRC has no effect on the direction of ICON Project i.e., ICON Project and BRC go up and down completely randomly.
Pair Corralation between ICON Project and BRC
Assuming the 90 days trading horizon ICON Project is expected to generate 1.42 times more return on investment than BRC. However, ICON Project is 1.42 times more volatile than BRC. It trades about 0.0 of its potential returns per unit of risk. BRC is currently generating about -0.01 per unit of risk. If you would invest 63.00 in ICON Project on January 20, 2024 and sell it today you would lose (40.00) from holding ICON Project or give up 63.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 71.4% |
| Values | Daily Returns |
ICON Project vs. BRC
Performance |
| Timeline |
| ICON Project |
| BRC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ICON Project and BRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICON Project and BRC
The main advantage of trading using opposite ICON Project and BRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICON Project position performs unexpectedly, BRC 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 BRC will offset losses from the drop in BRC's long position.The idea behind ICON Project and BRC 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.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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