Correlation Between Electra Co and Icon

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

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

Diversification Opportunities for Electra Co and Icon

0.75

Correlation Coefficient

Electra Co  Icon

Poor diversification

The 3 months correlation between Electra and Icon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Electra Co Pr and Icon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Group and Electra Co 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 Electra Co Pr are associated (or correlated) with Icon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Group has no effect on the direction of Electra Co i.e., Electra Co and Icon go up and down completely randomly.

Pair Corralation between Electra Co and Icon

Assuming the 90 days trading horizon Electra Co Pr is expected to generate 0.97 times more return on investment than Icon. However, Electra Co Pr is 1.03 times less risky than Icon. It trades about 0.19 of its potential returns per unit of risk. Icon Group is currently generating about 0.07 per unit of risk. If you would invest  1,061,000  in Electra Co Pr on April 23, 2025 and sell it today you would earn a total of  340,000  from holding Electra Co Pr or generate 32.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.96%
Values	Daily Returns

Electra Co Pr  vs.  Icon Group

Electra Co Pr

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Electra Co Pr are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Electra Co sustained solid returns over the last few months and may actually be approaching a breakup point.

Icon Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Icon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electra Co and Icon

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

The idea behind Electra Co Pr and Icon Group 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.