Correlation Between Ivy International and Nasdaq-100(r)

Can any of the company-specific risk be diversified away by investing in both Ivy International and Nasdaq-100(r) 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 Nasdaq-100(r) 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Ivy International and Nasdaq-100(r) 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 Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivy International and Nasdaq-100(r).

Diversification Opportunities for Ivy International and Nasdaq-100(r)

-0.04

Correlation Coefficient

Ivy International  Nasdaq-100(r)

Good diversification

The 3 months correlation between Ivy and Nasdaq-100(r) is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ivy International E and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Ivy International i.e., Ivy International and Nasdaq-100(r) go up and down completely randomly.

Pair Corralation between Ivy International and Nasdaq-100(r)

Assuming the 90 days horizon Ivy International is expected to generate 8.02 times less return on investment than Nasdaq-100(r). But when comparing it to its historical volatility, Ivy International E is 2.76 times less risky than Nasdaq-100(r). It trades about 0.03 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  14,640  in Nasdaq 100 2x Strategy on October 10, 2024 and sell it today you would earn a total of  24,600  from holding Nasdaq 100 2x Strategy or generate 168.03% 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.  Nasdaq 100 2x Strategy

Ivy International

Risk-Adjusted Performance

0 of 100

Very 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.

Nasdaq 100 2x

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Nasdaq 100 2x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Nasdaq-100(r) 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 International and Nasdaq-100(r)

The main advantage of trading using opposite Ivy International and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivy International position performs unexpectedly, Nasdaq-100(r) 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 Nasdaq-100(r) will offset losses from the drop in Nasdaq-100(r)'s long position.

The idea behind Ivy International E and Nasdaq 100 2x Strategy 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.