Correlation Between ICON Project and NEM
Can any of the company-specific risk be diversified away by investing in both ICON Project and NEM 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 NEM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICON Project and NEM, you can compare the effects of market volatilities on ICON Project and NEM 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 NEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON Project and NEM.
Diversification Opportunities for ICON Project and NEM
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ICON and NEM is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ICON Project and NEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEM 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 NEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEM has no effect on the direction of ICON Project i.e., ICON Project and NEM go up and down completely randomly.
Pair Corralation between ICON Project and NEM
Assuming the 90 days trading horizon ICON Project is expected to under-perform the NEM. In addition to that, ICON Project is 1.15 times more volatile than NEM. It trades about -0.24 of its total potential returns per unit of risk. NEM is currently generating about -0.21 per unit of volatility. If you would invest 5.38 in NEM on January 23, 2024 and sell it today you would lose (1.34) from holding NEM or give up 24.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICON Project vs. NEM
Performance |
| Timeline |
| ICON Project |
| NEM |
ICON Project and NEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICON Project and NEM
The main advantage of trading using opposite ICON Project and NEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICON Project position performs unexpectedly, NEM 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 NEM will offset losses from the drop in NEM's long position.| ICON Project vs. Ethereum | ICON Project vs. Cardano | ICON Project vs. Avalanche | ICON Project vs. Internet Computer |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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