Correlation Between Icon Longshort and Orea Mining

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

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

Diversification Opportunities for Icon Longshort and Orea Mining

0.41

Correlation Coefficient

Icon Longshort  Orea Mining

Very weak diversification

The 3 months correlation between Icon and Orea is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Icon Longshort Fund and Orea Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orea Mining Corp and Icon Longshort 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 Longshort Fund are associated (or correlated) with Orea Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orea Mining Corp has no effect on the direction of Icon Longshort i.e., Icon Longshort and Orea Mining go up and down completely randomly.

Pair Corralation between Icon Longshort and Orea Mining

Assuming the 90 days horizon Icon Longshort Fund is expected to under-perform the Orea Mining. But the mutual fund apears to be less risky and, when comparing its historical volatility, Icon Longshort Fund is 248.73 times less risky than Orea Mining. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Orea Mining Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Orea Mining Corp on January 25, 2024 and sell it today you would lose (1.00) from holding Orea Mining Corp or give up 99.9% of portfolio value over 90 days.

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

Icon Longshort Fund  vs.  Orea Mining Corp

Icon Longshort

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Longshort Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Icon Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Orea Mining Corp

Risk-Adjusted Performance

8 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orea Mining Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Orea Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Icon Longshort and Orea Mining

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

The idea behind Icon Longshort Fund and Orea Mining Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.