Correlation Between ICON Project and IOTA

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

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

Diversification Opportunities for ICON Project and IOTA

0.94

Correlation Coefficient

ICON Project  IOTA

Almost no diversification

The 3 months correlation between ICON and IOTA is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ICON Project and IOTA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOTA 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 IOTA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOTA has no effect on the direction of ICON Project i.e., ICON Project and IOTA go up and down completely randomly.

Pair Corralation between ICON Project and IOTA

Assuming the 90 days trading horizon ICON Project is expected to generate 1.1 times more return on investment than IOTA. However, ICON Project is 1.1 times more volatile than IOTA. It trades about -0.07 of its potential returns per unit of risk. IOTA is currently generating about -0.1 per unit of risk. If you would invest  27.00  in ICON Project on January 17, 2024 and sell it today you would lose (5.00) from holding ICON Project or give up 18.52% of portfolio value over 90 days.

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

ICON Project  vs.  IOTA

ICON Project

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ICON Project are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ICON Project may actually be approaching a critical reversion point that can send shares even higher in May 2024.

IOTA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IOTA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, IOTA may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with ICON Project and IOTA

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

The idea behind ICON Project and IOTA 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.