Correlation Between Old Westbury and Icon Bond

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

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

Diversification Opportunities for Old Westbury and Icon Bond

0.97

Correlation Coefficient

Old Westbury  Icon Bond

Almost no diversification

The 3 months correlation between Old and Icon is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Icon Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Bond Fund and Old Westbury 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 Old Westbury Municipal are associated (or correlated) with Icon Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Bond Fund has no effect on the direction of Old Westbury i.e., Old Westbury and Icon Bond go up and down completely randomly.

Pair Corralation between Old Westbury and Icon Bond

Assuming the 90 days horizon Old Westbury is expected to generate 1.88 times less return on investment than Icon Bond. But when comparing it to its historical volatility, Old Westbury Municipal is 1.33 times less risky than Icon Bond. It trades about 0.2 of its potential returns per unit of risk. Icon Bond Fund is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  845.00  in Icon Bond Fund on May 1, 2025 and sell it today you would earn a total of  17.00  from holding Icon Bond Fund or generate 2.01% return on investment over 90 days.

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

Old Westbury Municipal  vs.  Icon Bond Fund

Old Westbury Municipal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Old Westbury Municipal are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Old Westbury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Icon Bond Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Bond Fund are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Icon Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Old Westbury and Icon Bond

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

The idea behind Old Westbury Municipal and Icon Bond 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.