Correlation Between Ivy Energy and MDU Resources

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

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

Diversification Opportunities for Ivy Energy and MDU Resources

-0.22

Correlation Coefficient

Ivy Energy  MDU Resources

Very good diversification

The 3 months correlation between Ivy and MDU is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Energy Fund and MDU Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDU Resources Group and Ivy Energy 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 Energy Fund are associated (or correlated) with MDU Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDU Resources Group has no effect on the direction of Ivy Energy i.e., Ivy Energy and MDU Resources go up and down completely randomly.

Pair Corralation between Ivy Energy and MDU Resources

Assuming the 90 days horizon Ivy Energy Fund is expected to under-perform the MDU Resources. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ivy Energy Fund is 1.92 times less risky than MDU Resources. The mutual fund trades about -0.02 of its potential returns per unit of risk. The MDU Resources Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,337  in MDU Resources Group on October 7, 2024 and sell it today you would earn a total of  479.00  from holding MDU Resources Group or generate 35.83% return on investment over 90 days.

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

Ivy Energy Fund  vs.  MDU Resources Group

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 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.

MDU Resources Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MDU Resources Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, MDU Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ivy Energy and MDU Resources

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

The idea behind Ivy Energy Fund and MDU Resources Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.