Correlation Between Ivy Small and Ivy Energy

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

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

Diversification Opportunities for Ivy Small and Ivy Energy

-0.23

Correlation Coefficient

Ivy Small  Ivy Energy

Very good diversification

The 3 months correlation between Ivy and Ivy is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Small Cap 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 Ivy Small 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 Ivy Small Cap 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 Ivy Small i.e., Ivy Small and Ivy Energy go up and down completely randomly.

Pair Corralation between Ivy Small and Ivy Energy

Assuming the 90 days horizon Ivy Small Cap is expected to under-perform the Ivy Energy. In addition to that, Ivy Small is 1.74 times more volatile than Ivy Energy Fund. It trades about -0.04 of its total potential returns per unit of risk. Ivy Energy Fund is currently generating about -0.01 per unit of volatility. If you would invest  994.00  in Ivy Energy Fund on September 12, 2024 and sell it today you would lose (2.00) from holding Ivy Energy Fund or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Ivy Small Cap  vs.  Ivy Energy Fund

Ivy Small Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Small Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Ivy Small 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 forward 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 Ivy Small and Ivy Energy

The main advantage of trading using opposite Ivy Small and Ivy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivy Small 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 Ivy Small Cap 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.