Correlation Between ICON Project and Chainlink

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

By analyzing existing cross correlation between ICON Project and Chainlink, you can compare the effects of market volatilities on ICON Project and Chainlink 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 Chainlink. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON Project and Chainlink.

Diversification Opportunities for ICON Project and Chainlink

0.54

Correlation Coefficient

ICON Project  Chainlink

Very weak diversification

The 3 months correlation between ICON and Chainlink is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ICON Project and Chainlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainlink 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 Chainlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chainlink has no effect on the direction of ICON Project i.e., ICON Project and Chainlink go up and down completely randomly.

Pair Corralation between ICON Project and Chainlink

Assuming the 90 days trading horizon ICON Project is expected to under-perform the Chainlink. In addition to that, ICON Project is 1.37 times more volatile than Chainlink. It trades about -0.25 of its total potential returns per unit of risk. Chainlink is currently generating about -0.25 per unit of volatility. If you would invest  1,915  in Chainlink on January 27, 2024 and sell it today you would lose (478.00) from holding Chainlink or give up 24.96% of portfolio value over 90 days.

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

ICON Project  vs.  Chainlink

ICON Project

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICON Project are ranked lower than 4 (%) 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.

Chainlink

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Chainlink has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Chainlink is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ICON Project and Chainlink

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

The idea behind ICON Project and Chainlink 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.