Correlation Between ICON PLC and Anixa Biosciences

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

By analyzing existing cross correlation between ICON PLC and Anixa Biosciences, you can compare the effects of market volatilities on ICON PLC and Anixa Biosciences 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 PLC with a short position of Anixa Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON PLC and Anixa Biosciences.

Diversification Opportunities for ICON PLC and Anixa Biosciences

-0.05

Correlation Coefficient

ICON PLC  Anixa Biosciences

Good diversification

The 3 months correlation between ICON and Anixa is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ICON PLC and Anixa Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anixa Biosciences and ICON PLC 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 PLC are associated (or correlated) with Anixa Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anixa Biosciences has no effect on the direction of ICON PLC i.e., ICON PLC and Anixa Biosciences go up and down completely randomly.

Pair Corralation between ICON PLC and Anixa Biosciences

Given the investment horizon of 90 days ICON PLC is expected to generate 0.45 times more return on investment than Anixa Biosciences. However, ICON PLC is 2.23 times less risky than Anixa Biosciences. It trades about 0.09 of its potential returns per unit of risk. Anixa Biosciences is currently generating about -0.08 per unit of risk. If you would invest  28,348  in ICON PLC on February 19, 2024 and sell it today you would earn a total of  3,124  from holding ICON PLC or generate 11.02% return on investment over 90 days.

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

ICON PLC  vs.  Anixa Biosciences

ICON PLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICON PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent essential indicators, ICON PLC may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Anixa Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anixa Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ICON PLC and Anixa Biosciences

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

The idea behind ICON PLC and Anixa Biosciences 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.