Correlation Between Ivy Core and Sp Midcap

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

By analyzing existing cross correlation between Ivy E Equity and Sp Midcap 400, you can compare the effects of market volatilities on Ivy Core and Sp Midcap 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 Ivy Core with a short position of Sp Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivy Core and Sp Midcap.

Diversification Opportunities for Ivy Core and Sp Midcap

0.87

Correlation Coefficient

Ivy Core  Sp Midcap

Very poor diversification

The 3 months correlation between Ivy and RYBHX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ivy E Equity and Sp Midcap 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Midcap 400 and Ivy Core 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 Ivy E Equity are associated (or correlated) with Sp Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Midcap 400 has no effect on the direction of Ivy Core i.e., Ivy Core and Sp Midcap go up and down completely randomly.

Pair Corralation between Ivy Core and Sp Midcap

Assuming the 90 days horizon Ivy E Equity is expected to generate 0.82 times more return on investment than Sp Midcap. However, Ivy E Equity is 1.22 times less risky than Sp Midcap. It trades about -0.05 of its potential returns per unit of risk. Sp Midcap 400 is currently generating about -0.13 per unit of risk. If you would invest  2,012  in Ivy E Equity on December 19, 2024 and sell it today you would lose (61.00) from holding Ivy E Equity or give up 3.03% of portfolio value over 90 days.

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

Ivy E Equity  vs.  Sp Midcap 400

Ivy E Equity

Risk-Adjusted Performance

Very Weak

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

Sp Midcap 400

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sp Midcap 400 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical 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 Ivy Core and Sp Midcap

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

The idea behind Ivy E Equity and Sp Midcap 400 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.