Correlation Between Mid Cap and Ivy Managed

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

Diversification Opportunities for Mid Cap and Ivy Managed

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Mid and Ivy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Ivy Managed International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Managed International and Mid Cap 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 Mid Cap Growth are associated (or correlated) with Ivy Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Managed International has no effect on the direction of Mid Cap i.e., Mid Cap and Ivy Managed go up and down completely randomly.

Pair Corralation between Mid Cap and Ivy Managed

Assuming the 90 days horizon Mid Cap Growth is expected to generate 2.06 times more return on investment than Ivy Managed. However, Mid Cap is 2.06 times more volatile than Ivy Managed International. It trades about 0.11 of its potential returns per unit of risk. Ivy Managed International is currently generating about 0.11 per unit of risk. If you would invest  3,275  in Mid Cap Growth on September 8, 2024 and sell it today you would earn a total of  941.00  from holding Mid Cap Growth or generate 28.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy61.69%
ValuesDaily Returns

Mid Cap Growth  vs.  Ivy Managed International

 Performance 
       Timeline  
Mid Cap Growth 

Risk-Adjusted Performance

27 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mid Cap showed solid returns over the last few months and may actually be approaching a breakup point.
Ivy Managed International 

Risk-Adjusted Performance

0 of 100

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

Mid Cap and Ivy Managed Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mid Cap and Ivy Managed

The main advantage of trading using opposite Mid Cap and Ivy Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Ivy Managed 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 Managed will offset losses from the drop in Ivy Managed's long position.
The idea behind Mid Cap Growth and Ivy Managed International 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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