Correlation Between Essential Properties and Ivy Advantus

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

By analyzing existing cross correlation between Essential Properties Realty and Ivy Advantus Real, you can compare the effects of market volatilities on Essential Properties and Ivy Advantus 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 Essential Properties with a short position of Ivy Advantus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essential Properties and Ivy Advantus.

Diversification Opportunities for Essential Properties and Ivy Advantus

0.83

Correlation Coefficient

Essential Properties  Ivy Advantus

Very poor diversification

The 3 months correlation between Essential and Ivy is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty and Ivy Advantus Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Advantus Real and Essential Properties 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 Essential Properties Realty are associated (or correlated) with Ivy Advantus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Advantus Real has no effect on the direction of Essential Properties i.e., Essential Properties and Ivy Advantus go up and down completely randomly.

Pair Corralation between Essential Properties and Ivy Advantus

Given the investment horizon of 90 days Essential Properties Realty is expected to generate 0.75 times more return on investment than Ivy Advantus. However, Essential Properties Realty is 1.33 times less risky than Ivy Advantus. It trades about -0.01 of its potential returns per unit of risk. Ivy Advantus Real is currently generating about -0.11 per unit of risk. If you would invest  3,307  in Essential Properties Realty on December 2, 2024 and sell it today you would lose (35.00) from holding Essential Properties Realty or give up 1.06% of portfolio value over 90 days.

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

Essential Properties Realty  vs.  Ivy Advantus Real

Essential Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Essential Properties Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Essential Properties is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ivy Advantus Real

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Essential Properties and Ivy Advantus

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

The idea behind Essential Properties Realty and Ivy Advantus Real 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.