Correlation Between Blackrock Natural and Ivy Energy

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

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

Diversification Opportunities for Blackrock Natural and Ivy Energy

0.96

Correlation Coefficient

Blackrock Natural  Ivy Energy

Almost no diversification

The 3 months correlation between Blackrock and Ivy is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Natural Resources and Ivy Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Energy Fund and Blackrock 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 Blackrock Natural Resources are associated (or correlated) with Ivy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Energy Fund has no effect on the direction of Blackrock Natural i.e., Blackrock Natural and Ivy Energy go up and down completely randomly.

Pair Corralation between Blackrock Natural and Ivy Energy

Assuming the 90 days horizon Blackrock Natural Resources is expected to under-perform the Ivy Energy. In addition to that, Blackrock Natural is 1.15 times more volatile than Ivy Energy Fund. It trades about -0.06 of its total potential returns per unit of risk. Ivy Energy Fund is currently generating about -0.02 per unit of volatility. If you would invest  926.00  in Ivy Energy Fund on October 7, 2024 and sell it today you would lose (28.00) from holding Ivy Energy Fund or give up 3.02% of portfolio value over 90 days.

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

Blackrock Natural Resources  vs.  Ivy Energy Fund

Blackrock Natural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

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.

Pair Trading with Blackrock Natural and Ivy Energy

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

The idea behind Blackrock Natural Resources and Ivy Energy Fund 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.