Correlation Between American Funds and Ivy Emerging
Can any of the company-specific risk be diversified away by investing in both American Funds and Ivy Emerging 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 American Funds and Ivy Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Income and Ivy Emerging Markets, you can compare the effects of market volatilities on American Funds and Ivy Emerging 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 American Funds with a short position of Ivy Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Ivy Emerging.
Diversification Opportunities for American Funds and Ivy Emerging
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMERICAN and Ivy is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Income and Ivy Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Emerging Markets and American Funds 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 American Funds Income are associated (or correlated) with Ivy Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Emerging Markets has no effect on the direction of American Funds i.e., American Funds and Ivy Emerging go up and down completely randomly.
Pair Corralation between American Funds and Ivy Emerging
Assuming the 90 days horizon American Funds Income is expected to generate 0.41 times more return on investment than Ivy Emerging. However, American Funds Income is 2.45 times less risky than Ivy Emerging. It trades about 0.1 of its potential returns per unit of risk. Ivy Emerging Markets is currently generating about -0.15 per unit of risk. If you would invest 1,363 in American Funds Income on August 28, 2024 and sell it today you would earn a total of 10.00 from holding American Funds Income or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Income vs. Ivy Emerging Markets
Performance |
| Timeline |
| American Funds Income |
| Ivy Emerging Markets |
American Funds and Ivy Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Ivy Emerging
The main advantage of trading using opposite American Funds and Ivy Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Ivy Emerging 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 Emerging will offset losses from the drop in Ivy Emerging's long position.| American Funds vs. Chartwell Short Duration | American Funds vs. Vanguard Global Credit | American Funds vs. Limited Term Tax | American Funds vs. Ms Global Fixed |
| Ivy Emerging vs. Ivy International E | Ivy Emerging vs. Ivy E Equity | Ivy Emerging vs. Ivy E Equity | Ivy Emerging vs. Ivy Large Cap |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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