Correlation Between Ivy Balanced and Ivy Large

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

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

Diversification Opportunities for Ivy Balanced and Ivy Large

0.9

Correlation Coefficient

Ivy Balanced  Ivy Large

Almost no diversification

The 3 months correlation between Ivy and Ivy is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Balanced Fund and Ivy Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Large Cap and Ivy Balanced 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 Balanced Fund are associated (or correlated) with Ivy Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Large Cap has no effect on the direction of Ivy Balanced i.e., Ivy Balanced and Ivy Large go up and down completely randomly.

Pair Corralation between Ivy Balanced and Ivy Large

Assuming the 90 days horizon Ivy Balanced Fund is expected to under-perform the Ivy Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ivy Balanced Fund is 1.5 times less risky than Ivy Large. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Ivy Large Cap is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  4,170  in Ivy Large Cap on September 29, 2024 and sell it today you would lose (62.00) from holding Ivy Large Cap or give up 1.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

Ivy Balanced Fund  vs.  Ivy Large Cap

Ivy Balanced

Risk-Adjusted Performance

1 of 100

Weak

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.

Ivy Large Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Large Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ivy Large 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 Balanced and Ivy Large

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

The idea behind Ivy Balanced Fund and Ivy Large Cap 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.