Correlation Between Auer Growth and Ivy High

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

By analyzing existing cross correlation between Auer Growth Fund and Ivy High Income, you can compare the effects of market volatilities on Auer Growth and Ivy High 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 Auer Growth with a short position of Ivy High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auer Growth and Ivy High.

Diversification Opportunities for Auer Growth and Ivy High

0.18

Correlation Coefficient

Auer Growth  Ivy High

Average diversification

The 3 months correlation between Auer and Ivy is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Auer Growth Fund and Ivy High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy High Income and Auer Growth 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 Auer Growth Fund are associated (or correlated) with Ivy High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy High Income has no effect on the direction of Auer Growth i.e., Auer Growth and Ivy High go up and down completely randomly.

Pair Corralation between Auer Growth and Ivy High

Assuming the 90 days horizon Auer Growth Fund is expected to under-perform the Ivy High. In addition to that, Auer Growth is 10.06 times more volatile than Ivy High Income. It trades about -0.11 of its total potential returns per unit of risk. Ivy High Income is currently generating about 0.15 per unit of volatility. If you would invest  597.00  in Ivy High Income on September 15, 2024 and sell it today you would earn a total of  15.00  from holding Ivy High Income or generate 2.51% return on investment over 90 days.

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

Auer Growth Fund  vs.  Ivy High Income

Auer Growth Fund

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Auer Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Ivy High Income

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy High Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ivy High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Auer Growth and Ivy High

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

The idea behind Auer Growth Fund and Ivy High Income 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.