Correlation Between Aqr Style and Icon Natural

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

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

Diversification Opportunities for Aqr Style and Icon Natural

0.15

Correlation Coefficient

Aqr Style  Icon Natural

Average diversification

The 3 months correlation between Aqr and Icon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Style Premia and Icon Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Natural Resources and Aqr Style 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 Aqr Style Premia are associated (or correlated) with Icon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Natural Resources has no effect on the direction of Aqr Style i.e., Aqr Style and Icon Natural go up and down completely randomly.

Pair Corralation between Aqr Style and Icon Natural

Assuming the 90 days horizon Aqr Style is expected to generate 4.58 times less return on investment than Icon Natural. But when comparing it to its historical volatility, Aqr Style Premia is 2.03 times less risky than Icon Natural. It trades about 0.08 of its potential returns per unit of risk. Icon Natural Resources is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,592  in Icon Natural Resources on May 25, 2025 and sell it today you would earn a total of  228.00  from holding Icon Natural Resources or generate 14.32% return on investment over 90 days.

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

Aqr Style Premia  vs.  Icon Natural Resources

Aqr Style Premia

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Style Premia are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr Style is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Icon Natural Resources

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Natural Resources are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Icon Natural showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aqr Style and Icon Natural

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

The idea behind Aqr Style Premia and Icon Natural Resources 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.