Correlation Between Ivy Small and Ab Value

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

Diversification Opportunities for Ivy Small and Ab Value

0.45

Correlation Coefficient

Ivy Small  Ab Value

Very weak diversification

The 3 months correlation between Ivy and ABVCX is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Small Cap and Ab Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Value Fund 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 Ab Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Value Fund has no effect on the direction of Ivy Small i.e., Ivy Small and Ab Value go up and down completely randomly.

Pair Corralation between Ivy Small and Ab Value

Assuming the 90 days horizon Ivy Small Cap is expected to under-perform the Ab Value. In addition to that, Ivy Small is 1.89 times more volatile than Ab Value Fund. It trades about -0.07 of its total potential returns per unit of risk. Ab Value Fund is currently generating about 0.04 per unit of volatility. If you would invest  1,724  in Ab Value Fund on December 28, 2024 and sell it today you would earn a total of  31.00  from holding Ab Value Fund or generate 1.8% return on investment over 90 days.

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

Ivy Small Cap  vs.  Ab Value Fund

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 basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Ab Value Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Value Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Ab Value 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 Ab Value

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

The idea behind Ivy Small Cap and Ab Value Fund 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.