Correlation Between Inflation-protected and Ivy Global

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

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

Diversification Opportunities for Inflation-protected and Ivy Global

0.56

Correlation Coefficient

Inflation-protected  Ivy Global

Very weak diversification

The 3 months correlation between Inflation-protected and Ivy is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund and Ivy Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Global Bond and Inflation-protected 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 Inflation Protected Bond Fund are associated (or correlated) with Ivy Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Global Bond has no effect on the direction of Inflation-protected i.e., Inflation-protected and Ivy Global go up and down completely randomly.

Pair Corralation between Inflation-protected and Ivy Global

Assuming the 90 days horizon Inflation Protected Bond Fund is expected to under-perform the Ivy Global. In addition to that, Inflation-protected is 2.2 times more volatile than Ivy Global Bond. It trades about -0.1 of its total potential returns per unit of risk. Ivy Global Bond is currently generating about -0.1 per unit of volatility. If you would invest  921.00  in Ivy Global Bond on October 9, 2024 and sell it today you would lose (8.00) from holding Ivy Global Bond or give up 0.87% of portfolio value over 90 days.

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

Inflation Protected Bond Fund  vs.  Ivy Global Bond

Inflation Protected

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inflation Protected Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Inflation-protected is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ivy Global Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivy Global Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Ivy Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Inflation-protected and Ivy Global

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

The idea behind Inflation Protected Bond Fund and Ivy Global Bond 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.