Correlation Between ICON Project and DigiByte

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

Diversification Opportunities for ICON Project and DigiByte

0.96
  Correlation Coefficient

Almost no diversification

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

Pair Corralation between ICON Project and DigiByte

Assuming the 90 days trading horizon ICON Project is expected to generate 1.11 times less return on investment than DigiByte. In addition to that, ICON Project is 1.01 times more volatile than DigiByte. It trades about 0.13 of its total potential returns per unit of risk. DigiByte is currently generating about 0.15 per unit of volatility. If you would invest  0.94  in DigiByte on December 29, 2023 and sell it today you would earn a total of  0.49  from holding DigiByte or generate 51.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

ICON Project  vs.  DigiByte

 Performance 
       Timeline  
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 weak basic indicators, ICON Project exhibited solid returns over the last few months and may actually be approaching a breakup point.
DigiByte 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in DigiByte are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, DigiByte exhibited solid returns over the last few months and may actually be approaching a breakup point.

ICON Project and DigiByte Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ICON Project and DigiByte

The main advantage of trading using opposite ICON Project and DigiByte positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICON Project position performs unexpectedly, DigiByte 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 DigiByte will offset losses from the drop in DigiByte's long position.
The idea behind ICON Project and DigiByte 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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