Correlation Between Jennison Natural and Ivy Managed

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

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

Diversification Opportunities for Jennison Natural and Ivy Managed

0.0

Correlation Coefficient

Jennison Natural  Ivy Managed

Pay attention - limited upside

The 3 months correlation between Jennison and Ivy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Ivy Managed International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Managed International and Jennison 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 Jennison Natural Resources are associated (or correlated) with Ivy Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Managed International has no effect on the direction of Jennison Natural i.e., Jennison Natural and Ivy Managed go up and down completely randomly.

Pair Corralation between Jennison Natural and Ivy Managed

Assuming the 90 days horizon Jennison Natural Resources is not expected to generate positive returns. Moreover, Jennison Natural is 1.96 times more volatile than Ivy Managed International. It trades away all of its potential returns to assume current level of volatility. Ivy Managed International is currently generating about 0.04 per unit of risk. If you would invest  501.00  in Ivy Managed International on October 11, 2024 and sell it today you would earn a total of  46.00  from holding Ivy Managed International or generate 9.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	76.57%
Values	Daily Returns

Jennison Natural Resources  vs.  Ivy Managed International

Jennison Natural Res

Risk-Adjusted Performance

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Very Weak

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

Ivy Managed International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jennison Natural and Ivy Managed

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

The idea behind Jennison Natural Resources and Ivy Managed International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.