Correlation Between Icon and Melisron

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

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

Diversification Opportunities for Icon and Melisron

-0.76

Correlation Coefficient

Icon  Melisron

Pay attention - limited upside

The 3 months correlation between Icon and Melisron is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Icon Group and Melisron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melisron and Icon 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 Group are associated (or correlated) with Melisron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melisron has no effect on the direction of Icon i.e., Icon and Melisron go up and down completely randomly.

Pair Corralation between Icon and Melisron

Assuming the 90 days trading horizon Icon Group is expected to generate 1.91 times more return on investment than Melisron. However, Icon is 1.91 times more volatile than Melisron. It trades about 0.06 of its potential returns per unit of risk. Melisron is currently generating about -0.12 per unit of risk. If you would invest  45,500  in Icon Group on January 15, 2025 and sell it today you would earn a total of  2,720  from holding Icon Group or generate 5.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.08%
Values	Daily Returns

Icon Group  vs.  Melisron

Icon Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Icon may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Melisron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Melisron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Icon and Melisron

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

The idea behind Icon Group and Melisron 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.