Correlation Between VivoPower International and Ivy Large

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

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

Diversification Opportunities for VivoPower International and Ivy Large

-0.15

Correlation Coefficient

VivoPower International  Ivy Large

Good diversification

The 3 months correlation between VivoPower and Ivy is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Ivy Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Large Cap and VivoPower 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 VivoPower International PLC are associated (or correlated) with Ivy Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Large Cap has no effect on the direction of VivoPower International i.e., VivoPower International and Ivy Large go up and down completely randomly.

Pair Corralation between VivoPower International and Ivy Large

Given the investment horizon of 90 days VivoPower International PLC is expected to generate 21.14 times more return on investment than Ivy Large. However, VivoPower International is 21.14 times more volatile than Ivy Large Cap. It trades about 0.15 of its potential returns per unit of risk. Ivy Large Cap is currently generating about -0.11 per unit of risk. If you would invest  134.00  in VivoPower International PLC on December 29, 2024 and sell it today you would earn a total of  258.00  from holding VivoPower International PLC or generate 192.54% return on investment over 90 days.

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

VivoPower International PLC  vs.  Ivy Large Cap

VivoPower International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VivoPower International PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VivoPower International reported solid returns over the last few months and may actually be approaching a breakup point.

Ivy Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivy Large Cap 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 VivoPower International and Ivy Large

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

The idea behind VivoPower International PLC and Ivy Large Cap 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.