Correlation Between Ivy Natural and Touchstone Small

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

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

Diversification Opportunities for Ivy Natural and Touchstone Small

0.79

Correlation Coefficient

Ivy Natural  Touchstone Small

Poor diversification

The 3 months correlation between Ivy and Touchstone is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Natural Resources and Touchstone Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Pany and Ivy Natural 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 Natural Resources are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Pany has no effect on the direction of Ivy Natural i.e., Ivy Natural and Touchstone Small go up and down completely randomly.

Pair Corralation between Ivy Natural and Touchstone Small

Assuming the 90 days horizon Ivy Natural Resources is expected to generate 1.09 times more return on investment than Touchstone Small. However, Ivy Natural is 1.09 times more volatile than Touchstone Small Pany. It trades about 0.04 of its potential returns per unit of risk. Touchstone Small Pany is currently generating about -0.1 per unit of risk. If you would invest  1,169  in Ivy Natural Resources on December 30, 2024 and sell it today you would earn a total of  27.00  from holding Ivy Natural Resources or generate 2.31% return on investment over 90 days.

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

Ivy Natural Resources  vs.  Touchstone Small Pany

Ivy Natural Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Natural Resources are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Ivy Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Touchstone Small Pany

Risk-Adjusted Performance

Very Weak

Over the last 90 days Touchstone Small Pany 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 Ivy Natural and Touchstone Small

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

The idea behind Ivy Natural Resources and Touchstone Small Pany 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.