Correlation Between ICON Project and REP

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

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

Diversification Opportunities for ICON Project and REP

0.95

Correlation Coefficient

ICON Project  REP

Almost no diversification

The 3 months correlation between ICON and REP is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ICON Project and REP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REP 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 REP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REP has no effect on the direction of ICON Project i.e., ICON Project and REP go up and down completely randomly.

Pair Corralation between ICON Project and REP

Assuming the 90 days trading horizon ICON Project is expected to under-perform the REP. But the crypto coin apears to be less risky and, when comparing its historical volatility, ICON Project is 1.05 times less risky than REP. The crypto coin trades about -0.24 of its potential returns per unit of risk. The REP is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  124.00  in REP on January 25, 2024 and sell it today you would lose (25.00) from holding REP or give up 20.16% 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.  REP

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.

REP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in REP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, REP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICON Project and REP

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

The idea behind ICON Project and REP 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.