Correlation Between First Investors and Ivy Energy

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

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

Diversification Opportunities for First Investors and Ivy Energy

-0.54

Correlation Coefficient

First Investors  Ivy Energy

Excellent diversification

The 3 months correlation between First and Ivy is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding First Investors Select and Ivy Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Energy Fund and First Investors 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 First Investors Select are associated (or correlated) with Ivy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Energy Fund has no effect on the direction of First Investors i.e., First Investors and Ivy Energy go up and down completely randomly.

Pair Corralation between First Investors and Ivy Energy

Assuming the 90 days horizon First Investors Select is expected to generate 2.11 times more return on investment than Ivy Energy. However, First Investors is 2.11 times more volatile than Ivy Energy Fund. It trades about -0.04 of its potential returns per unit of risk. Ivy Energy Fund is currently generating about -0.16 per unit of risk. If you would invest  1,263  in First Investors Select on September 15, 2024 and sell it today you would lose (17.00) from holding First Investors Select or give up 1.35% of portfolio value over 90 days.

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

First Investors Select  vs.  Ivy Energy Fund

First Investors Select

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Investors Select are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, First Investors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ivy Energy Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with First Investors and Ivy Energy

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

The idea behind First Investors Select and Ivy Energy 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.