Correlation Between Ivy Crossover and Small Cap

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Can any of the company-specific risk be diversified away by investing in both Ivy Crossover and Small Cap 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 Crossover and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivy Crossover Credit and Small Cap Value, you can compare the effects of market volatilities on Ivy Crossover and Small Cap 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 Crossover with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivy Crossover and Small Cap.

Diversification Opportunities for Ivy Crossover and Small Cap

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Ivy and SMALL is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Crossover Credit and Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value and Ivy Crossover 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 Crossover Credit are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Ivy Crossover i.e., Ivy Crossover and Small Cap go up and down completely randomly.

Pair Corralation between Ivy Crossover and Small Cap

Assuming the 90 days horizon Ivy Crossover is expected to generate 2.65 times less return on investment than Small Cap. But when comparing it to its historical volatility, Ivy Crossover Credit is 2.78 times less risky than Small Cap. It trades about 0.07 of its potential returns per unit of risk. Small Cap Value is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  937.00  in Small Cap Value on September 4, 2024 and sell it today you would earn a total of  282.00  from holding Small Cap Value or generate 30.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy7.8%
ValuesDaily Returns

Ivy Crossover Credit  vs.  Small Cap Value

 Performance 
       Timeline  
Ivy Crossover Credit 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Value are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ivy Crossover and Small Cap Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ivy Crossover and Small Cap

The main advantage of trading using opposite Ivy Crossover and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivy Crossover position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.
The idea behind Ivy Crossover Credit and Small Cap Value 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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