Correlation Between Vanguard Financials and Icon Financial

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

By analyzing existing cross correlation between Vanguard Financials Index and Icon Financial Fund, you can compare the effects of market volatilities on Vanguard Financials and Icon Financial 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 Vanguard Financials with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Financials and Icon Financial.

Diversification Opportunities for Vanguard Financials and Icon Financial

0.84

Correlation Coefficient

Vanguard Financials  Icon Financial

Very poor diversification

The 3 months correlation between Vanguard and Icon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Financials Index and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and Vanguard Financials 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 Vanguard Financials Index are associated (or correlated) with Icon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Financial has no effect on the direction of Vanguard Financials i.e., Vanguard Financials and Icon Financial go up and down completely randomly.

Pair Corralation between Vanguard Financials and Icon Financial

Assuming the 90 days horizon Vanguard Financials Index is expected to under-perform the Icon Financial. In addition to that, Vanguard Financials is 1.02 times more volatile than Icon Financial Fund. It trades about -0.02 of its total potential returns per unit of risk. Icon Financial Fund is currently generating about 0.04 per unit of volatility. If you would invest  950.00  in Icon Financial Fund on July 19, 2025 and sell it today you would earn a total of  18.00  from holding Icon Financial Fund or generate 1.89% return on investment over 90 days.

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

Vanguard Financials Index  vs.  Icon Financial Fund

Vanguard Financials Index

Risk-Adjusted Performance

Weakest

Over the last 90 days Vanguard Financials Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Vanguard Financials is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Icon Financial

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Financial Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Icon Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Financials and Icon Financial

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

The idea behind Vanguard Financials Index and Icon Financial Fund 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.