Correlation Between California Municipal and Ivy Small

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both California Municipal and Ivy Small 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 California Municipal and Ivy Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Municipal Portfolio and Ivy Small Cap, you can compare the effects of market volatilities on California Municipal and Ivy Small 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 California Municipal with a short position of Ivy Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Municipal and Ivy Small.

Diversification Opportunities for California Municipal and Ivy Small

CaliforniaIvyDiversified AwayCaliforniaIvyDiversified Away100%
0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between California and Ivy is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding California Municipal Portfolio and Ivy Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Small Cap and California Municipal 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 California Municipal Portfolio are associated (or correlated) with Ivy Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Small Cap has no effect on the direction of California Municipal i.e., California Municipal and Ivy Small go up and down completely randomly.

Pair Corralation between California Municipal and Ivy Small

Assuming the 90 days horizon California Municipal Portfolio is expected to generate 0.12 times more return on investment than Ivy Small. However, California Municipal Portfolio is 8.53 times less risky than Ivy Small. It trades about 0.21 of its potential returns per unit of risk. Ivy Small Cap is currently generating about -0.25 per unit of risk. If you would invest  1,382  in California Municipal Portfolio on November 30, 2024 and sell it today you would earn a total of  9.00  from holding California Municipal Portfolio or generate 0.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

California Municipal Portfolio  vs.  Ivy Small Cap

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 051015
JavaScript chart by amCharts 3.21.15SNCAX WSCYX
       Timeline  
California Municipal 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days California Municipal Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, California Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb13.713.7513.813.8513.9
Ivy Small Cap 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Ivy Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb18.51919.52020.52121.5

California Municipal and Ivy Small Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.47-0.26-0.0906-0.0430.0022650.04660.09560.290.5 2468101214
JavaScript chart by amCharts 3.21.15SNCAX WSCYX
       Returns  

Pair Trading with California Municipal and Ivy Small

The main advantage of trading using opposite California Municipal and Ivy Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Municipal position performs unexpectedly, Ivy Small 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 Small will offset losses from the drop in Ivy Small's long position.
The idea behind California Municipal Portfolio and Ivy Small Cap 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.
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 Stocks Directory module to find actively traded stocks across global markets.

Other Complementary Tools

Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Global Correlations
Find global opportunities by holding instruments from different markets
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios