Correlation Between Short Real and Ivy Emerging

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

By analyzing existing cross correlation between Short Real Estate and Ivy Emerging Markets, you can compare the effects of market volatilities on Short Real and Ivy Emerging 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 Short Real with a short position of Ivy Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Real and Ivy Emerging.

Diversification Opportunities for Short Real and Ivy Emerging

-0.65

Correlation Coefficient

Short Real  Ivy Emerging

Excellent diversification

The 3 months correlation between Short and Ivy is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Short Real Estate and Ivy Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Emerging Markets and Short Real 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 Short Real Estate are associated (or correlated) with Ivy Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Emerging Markets has no effect on the direction of Short Real i.e., Short Real and Ivy Emerging go up and down completely randomly.

Pair Corralation between Short Real and Ivy Emerging

Assuming the 90 days horizon Short Real Estate is expected to under-perform the Ivy Emerging. In addition to that, Short Real is 1.17 times more volatile than Ivy Emerging Markets. It trades about -0.01 of its total potential returns per unit of risk. Ivy Emerging Markets is currently generating about 0.04 per unit of volatility. If you would invest  1,726  in Ivy Emerging Markets on October 3, 2024 and sell it today you would earn a total of  163.00  from holding Ivy Emerging Markets or generate 9.44% return on investment over 90 days.

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

Short Real Estate  vs.  Ivy Emerging Markets

Short Real Estate

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Short Real Estate are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Short Real may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ivy Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivy Emerging Markets 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 Short Real and Ivy Emerging

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

The idea behind Short Real Estate and Ivy Emerging Markets 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.