Correlation Between ICOA and GTT Communications

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

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

Diversification Opportunities for ICOA and GTT Communications

0.0

Correlation Coefficient

ICOA  GTT Communications

Pay attention - limited upside

The 3 months correlation between ICOA and GTT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ICOA Inc and GTT Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GTT Communications and ICOA 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 ICOA Inc are associated (or correlated) with GTT Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GTT Communications has no effect on the direction of ICOA i.e., ICOA and GTT Communications go up and down completely randomly.

Pair Corralation between ICOA and GTT Communications

If you would invest  0.01  in ICOA Inc on January 25, 2024 and sell it today you would earn a total of  0.00  from holding ICOA Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ICOA Inc  vs.  GTT Communications

ICOA Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICOA Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, ICOA sustained solid returns over the last few months and may actually be approaching a breakup point.

GTT Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GTT Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GTT Communications is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ICOA and GTT Communications

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

The idea behind ICOA Inc and GTT Communications 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.