Correlation Between Gotham Large and Icon Financial

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

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

Diversification Opportunities for Gotham Large and Icon Financial

0.44

Correlation Coefficient

Gotham Large  Icon Financial

Very weak diversification

The 3 months correlation between Gotham and Icon is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gotham Large Value and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and Gotham Large 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 Gotham Large Value 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 Gotham Large i.e., Gotham Large and Icon Financial go up and down completely randomly.

Pair Corralation between Gotham Large and Icon Financial

Assuming the 90 days horizon Gotham Large is expected to generate 1.23 times less return on investment than Icon Financial. But when comparing it to its historical volatility, Gotham Large Value is 1.2 times less risky than Icon Financial. It trades about 0.2 of its potential returns per unit of risk. Icon Financial Fund is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  879.00  in Icon Financial Fund on April 25, 2025 and sell it today you would earn a total of  108.00  from holding Icon Financial Fund or generate 12.29% return on investment over 90 days.

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

Gotham Large Value  vs.  Icon Financial Fund

Gotham Large Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gotham Large Value are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Gotham Large may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Icon Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Financial Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Icon Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Gotham Large and Icon Financial

The main advantage of trading using opposite Gotham Large and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gotham Large 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.

The idea behind Gotham Large Value and Icon Financial Fund 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.