Correlation Between Europac Gold and Ivy Balanced

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

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

Diversification Opportunities for Europac Gold and Ivy Balanced

-0.34

Correlation Coefficient

Europac Gold  Ivy Balanced

Very good diversification

The 3 months correlation between Europac and Ivy is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Ivy Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Balanced and Europac Gold 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 Europac Gold Fund are associated (or correlated) with Ivy Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Balanced has no effect on the direction of Europac Gold i.e., Europac Gold and Ivy Balanced go up and down completely randomly.

Pair Corralation between Europac Gold and Ivy Balanced

Assuming the 90 days horizon Europac Gold is expected to generate 1.68 times less return on investment than Ivy Balanced. In addition to that, Europac Gold is 3.03 times more volatile than Ivy Balanced Fund. It trades about 0.02 of its total potential returns per unit of risk. Ivy Balanced Fund is currently generating about 0.09 per unit of volatility. If you would invest  2,224  in Ivy Balanced Fund on September 29, 2024 and sell it today you would earn a total of  159.00  from holding Ivy Balanced Fund or generate 7.15% return on investment over 90 days.

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

Europac Gold Fund  vs.  Ivy Balanced Fund

Europac Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europac Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Ivy Balanced

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Balanced Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ivy Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Europac Gold and Ivy Balanced

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

The idea behind Europac Gold Fund and Ivy Balanced 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..