Correlation Between Barings Active and Ivy Balanced
Can any of the company-specific risk be diversified away by investing in both Barings Active and Ivy Balanced 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 Barings Active and Ivy Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Active Short and Ivy Balanced Fund, you can compare the effects of market volatilities on Barings Active and Ivy Balanced 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 Barings Active with a short position of Ivy Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Ivy Balanced.
Diversification Opportunities for Barings Active and Ivy Balanced
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Ivy is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Ivy Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Balanced and Barings Active 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 Barings Active Short are associated (or correlated) with Ivy Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Balanced has no effect on the direction of Barings Active i.e., Barings Active and Ivy Balanced go up and down completely randomly.
Pair Corralation between Barings Active and Ivy Balanced
Assuming the 90 days horizon Barings Active is expected to generate 17.16 times less return on investment than Ivy Balanced. But when comparing it to its historical volatility, Barings Active Short is 4.26 times less risky than Ivy Balanced. It trades about 0.09 of its potential returns per unit of risk. Ivy Balanced Fund is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 2,290 in Ivy Balanced Fund on September 1, 2024 and sell it today you would earn a total of 91.00 from holding Ivy Balanced Fund or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Barings Active Short vs. Ivy Balanced Fund
Performance |
| Timeline |
| Barings Active Short |
| Ivy Balanced |
Barings Active and Ivy Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Ivy Balanced
The main advantage of trading using opposite Barings Active and Ivy Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Ivy Balanced 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 Balanced will offset losses from the drop in Ivy Balanced's long position.| Barings Active vs. Ab Bond Inflation | Barings Active vs. Western Asset Inflation | Barings Active vs. Blackrock Inflation Protected | Barings Active vs. Aqr Managed Futures |
| Ivy Balanced vs. Ivy Large Cap | Ivy Balanced vs. Ivy Small Cap | Ivy Balanced vs. Ivy High Income | Ivy Balanced vs. Ivy Apollo Multi Asset |
Check out your portfolio center.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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