Correlation Between Ivy Small and WEBTOON Entertainment

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

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

Diversification Opportunities for Ivy Small and WEBTOON Entertainment

0.82

Correlation Coefficient

Ivy Small  WEBTOON Entertainment

Very poor diversification

The 3 months correlation between Ivy and WEBTOON is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Small Cap and WEBTOON Entertainment Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEBTOON Entertainment and Ivy Small 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 Small Cap are associated (or correlated) with WEBTOON Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEBTOON Entertainment has no effect on the direction of Ivy Small i.e., Ivy Small and WEBTOON Entertainment go up and down completely randomly.

Pair Corralation between Ivy Small and WEBTOON Entertainment

Assuming the 90 days horizon Ivy Small Cap is expected to generate 0.43 times more return on investment than WEBTOON Entertainment. However, Ivy Small Cap is 2.33 times less risky than WEBTOON Entertainment. It trades about -0.07 of its potential returns per unit of risk. WEBTOON Entertainment Common is currently generating about -0.2 per unit of risk. If you would invest  643.00  in Ivy Small Cap on December 28, 2024 and sell it today you would lose (47.00) from holding Ivy Small Cap or give up 7.31% of portfolio value over 90 days.

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

Ivy Small Cap  vs.  WEBTOON Entertainment Common

Ivy Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivy Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

WEBTOON Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days WEBTOON Entertainment Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ivy Small and WEBTOON Entertainment

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

The idea behind Ivy Small Cap and WEBTOON Entertainment Common 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.