Correlation Between American Funds and Ivy Natural
Can any of the company-specific risk be diversified away by investing in both American Funds and Ivy Natural 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 Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2015 and Ivy Natural Resources, you can compare the effects of market volatilities on American Funds and Ivy Natural 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 Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Ivy Natural.
Diversification Opportunities for American Funds and Ivy Natural
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Ivy is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2015 and Ivy Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Natural Resources 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 2015 are associated (or correlated) with Ivy Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Natural Resources has no effect on the direction of American Funds i.e., American Funds and Ivy Natural go up and down completely randomly.
Pair Corralation between American Funds and Ivy Natural
Assuming the 90 days horizon American Funds is expected to generate 3.16 times less return on investment than Ivy Natural. But when comparing it to its historical volatility, American Funds 2015 is 2.87 times less risky than Ivy Natural. It trades about 0.21 of its potential returns per unit of risk. Ivy Natural Resources is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,313 in Ivy Natural Resources on September 1, 2024 and sell it today you would earn a total of 57.00 from holding Ivy Natural Resources or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Funds 2015 vs. Ivy Natural Resources
Performance |
| Timeline |
| American Funds 2015 |
| Ivy Natural Resources |
American Funds and Ivy Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Ivy Natural
The main advantage of trading using opposite American Funds and Ivy Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Ivy Natural 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 Natural will offset losses from the drop in Ivy Natural's long position.| American Funds vs. American Funds 2055 | American Funds vs. American Funds 2010 | American Funds vs. Fidelity Advisor Emerging | American Funds vs. Aquagold International |
| Ivy Natural vs. Ivy Large Cap | Ivy Natural vs. Ivy Small Cap | Ivy Natural vs. Ivy High Income | Ivy Natural 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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