Correlation Between DigiByte and ICON Project

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Can any of the company-specific risk be diversified away by investing in both DigiByte and ICON Project 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 DigiByte and ICON Project into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DigiByte and ICON Project, you can compare the effects of market volatilities on DigiByte and ICON Project 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 DigiByte with a short position of ICON Project. Check out your portfolio center. Please also check ongoing floating volatility patterns of DigiByte and ICON Project.

Diversification Opportunities for DigiByte and ICON Project

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between DigiByte and ICON is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding DigiByte and ICON Project in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON Project and DigiByte 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 DigiByte are associated (or correlated) with ICON Project. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICON Project has no effect on the direction of DigiByte i.e., DigiByte and ICON Project go up and down completely randomly.

Pair Corralation between DigiByte and ICON Project

Assuming the 90 days trading horizon DigiByte is expected to generate 2.25 times less return on investment than ICON Project. But when comparing it to its historical volatility, DigiByte is 1.21 times less risky than ICON Project. It trades about 0.0 of its potential returns per unit of risk. ICON Project is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  76.00  in ICON Project on December 30, 2023 and sell it today you would lose (40.00) from holding ICON Project or give up 52.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

DigiByte  vs.  ICON Project

 Performance 
       Timeline  
DigiByte 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in DigiByte are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, DigiByte exhibited solid returns over the last few months and may actually be approaching a breakup point.
ICON Project 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ICON Project are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ICON Project exhibited solid returns over the last few months and may actually be approaching a breakup point.

DigiByte and ICON Project Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DigiByte and ICON Project

The main advantage of trading using opposite DigiByte and ICON Project positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DigiByte position performs unexpectedly, ICON Project 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 Project will offset losses from the drop in ICON Project's long position.
The idea behind DigiByte and ICON Project 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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