Correlation Between Biotechnology Fund and Ivy Managed

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

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

Diversification Opportunities for Biotechnology Fund and Ivy Managed

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Correlation Coefficient

Biotechnology Fund  Ivy Managed

Pay attention - limited upside

The 3 months correlation between BIOTECHNOLOGY and Ivy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Biotechnology Fund Class 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 Biotechnology Fund 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 Biotechnology Fund Class 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 Biotechnology Fund i.e., Biotechnology Fund and Ivy Managed go up and down completely randomly.

Pair Corralation between Biotechnology Fund and Ivy Managed

Assuming the 90 days horizon Biotechnology Fund Class is expected to under-perform the Ivy Managed. But the mutual fund apears to be less risky and, when comparing its historical volatility, Biotechnology Fund Class is 3.26 times less risky than Ivy Managed. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Ivy Managed International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  486.00  in Ivy Managed International on October 10, 2024 and sell it today you would earn a total of  62.00  from holding Ivy Managed International or generate 12.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	76.77%
Values	Daily Returns

Biotechnology Fund Class  vs.  Ivy Managed International

Biotechnology Fund Class

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Biotechnology Fund Class 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 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 basic 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 Biotechnology Fund and Ivy Managed

The main advantage of trading using opposite Biotechnology Fund and Ivy Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biotechnology Fund 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 Biotechnology Fund Class 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.