Correlation Between Ivy International and Large Cap

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

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

Diversification Opportunities for Ivy International and Large Cap

-0.3

Correlation Coefficient

Ivy International  Large Cap

Very good diversification

The 3 months correlation between Ivy and Large is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ivy International E and Large Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth and Ivy International 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 International E are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Growth has no effect on the direction of Ivy International i.e., Ivy International and Large Cap go up and down completely randomly.

Pair Corralation between Ivy International and Large Cap

Assuming the 90 days horizon Ivy International is expected to generate 28.15 times less return on investment than Large Cap. But when comparing it to its historical volatility, Ivy International E is 1.14 times less risky than Large Cap. It trades about 0.01 of its potential returns per unit of risk. Large Cap Growth Profund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,178  in Large Cap Growth Profund on September 12, 2024 and sell it today you would earn a total of  457.00  from holding Large Cap Growth Profund or generate 10.94% return on investment over 90 days.

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

Ivy International E  vs.  Large Cap Growth Profund

Ivy International

Risk-Adjusted Performance

0 of 100

Weak

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

Large Cap Growth

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth Profund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Large Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ivy International and Large Cap

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

The idea behind Ivy International E and Large Cap Growth Profund 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.