Correlation Between Davis Financial and Icon Information

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

By analyzing existing cross correlation between Davis Financial Fund and Icon Information Technology, you can compare the effects of market volatilities on Davis Financial and Icon Information 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 Davis Financial with a short position of Icon Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and Icon Information.

Diversification Opportunities for Davis Financial and Icon Information

0.89

Correlation Coefficient

Davis Financial  Icon Information

Very poor diversification

The 3 months correlation between Davis and Icon is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Icon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Information Tec and Davis Financial 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 Davis Financial Fund are associated (or correlated) with Icon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Information Tec has no effect on the direction of Davis Financial i.e., Davis Financial and Icon Information go up and down completely randomly.

Pair Corralation between Davis Financial and Icon Information

Assuming the 90 days horizon Davis Financial is expected to generate 1.16 times less return on investment than Icon Information. But when comparing it to its historical volatility, Davis Financial Fund is 1.16 times less risky than Icon Information. It trades about 0.11 of its potential returns per unit of risk. Icon Information Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,565  in Icon Information Technology on May 20, 2025 and sell it today you would earn a total of  109.00  from holding Icon Information Technology or generate 6.96% return on investment over 90 days.

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

Davis Financial Fund  vs.  Icon Information Technology

Davis Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Davis Financial Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Davis Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Icon Information Tec

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Information Technology are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Icon Information may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Davis Financial and Icon Information

The main advantage of trading using opposite Davis Financial and Icon Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Financial position performs unexpectedly, Icon Information 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 Information will offset losses from the drop in Icon Information's long position.

The idea behind Davis Financial Fund and Icon Information Technology 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.