Correlation Between Ivy Asset and Henderson European
Can any of the company-specific risk be diversified away by investing in both Ivy Asset and Henderson European 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 Asset and Henderson European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivy Asset Strategy and Henderson European Focus, you can compare the effects of market volatilities on Ivy Asset and Henderson European 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 Asset with a short position of Henderson European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivy Asset and Henderson European.
Diversification Opportunities for Ivy Asset and Henderson European
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ivy and Henderson is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Asset Strategy and Henderson European Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson European Focus and Ivy Asset 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 Asset Strategy are associated (or correlated) with Henderson European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson European Focus has no effect on the direction of Ivy Asset i.e., Ivy Asset and Henderson European go up and down completely randomly.
Pair Corralation between Ivy Asset and Henderson European
Assuming the 90 days horizon Ivy Asset Strategy is expected to generate 0.64 times more return on investment than Henderson European. However, Ivy Asset Strategy is 1.56 times less risky than Henderson European. It trades about 0.09 of its potential returns per unit of risk. Henderson European Focus is currently generating about 0.04 per unit of risk. If you would invest 1,634 in Ivy Asset Strategy on September 3, 2024 and sell it today you would earn a total of 445.00 from holding Ivy Asset Strategy or generate 27.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivy Asset Strategy vs. Henderson European Focus
Performance |
| Timeline |
| Ivy Asset Strategy |
| Henderson European Focus |
Ivy Asset and Henderson European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivy Asset and Henderson European
The main advantage of trading using opposite Ivy Asset and Henderson European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivy Asset position performs unexpectedly, Henderson European 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 Henderson European will offset losses from the drop in Henderson European's long position.| Ivy Asset vs. Fidelity Advisor Technology | Ivy Asset vs. Science Technology Fund | Ivy Asset vs. Vanguard Information Technology | Ivy Asset vs. Technology Ultrasector Profund |
| Henderson European vs. Vanguard European Stock | Henderson European vs. Vanguard European Stock | Henderson European vs. Invesco European Growth | Henderson European vs. Invesco European Growth |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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