Correlation Between Ivy Small and Money Market

Can any of the company-specific risk be diversified away by investing in both Ivy Small and Money Market 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 Money Market 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 Money Market Obligations, you can compare the effects of market volatilities on Ivy Small and Money Market 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 Money Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivy Small and Money Market.

Diversification Opportunities for Ivy Small and Money Market

0.37

Correlation Coefficient

Ivy Small  Money Market

Weak diversification

The 3 months correlation between Ivy and Money is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Small Cap and Money Market Obligations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Money Market Obligations 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 Money Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Money Market Obligations has no effect on the direction of Ivy Small i.e., Ivy Small and Money Market go up and down completely randomly.

Pair Corralation between Ivy Small and Money Market

Assuming the 90 days horizon Ivy Small Cap is expected to generate 9.63 times more return on investment than Money Market. However, Ivy Small is 9.63 times more volatile than Money Market Obligations. It trades about 0.09 of its potential returns per unit of risk. Money Market Obligations is currently generating about 0.13 per unit of risk. If you would invest  1,958  in Ivy Small Cap on September 13, 2024 and sell it today you would earn a total of  138.00  from holding Ivy Small Cap or generate 7.05% return on investment over 90 days.

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

Ivy Small Cap  vs.  Money Market Obligations

Ivy Small Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ivy Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Money Market Obligations

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Money Market Obligations are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Money Market is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ivy Small and Money Market

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

The idea behind Ivy Small Cap and Money Market Obligations 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.