Correlation Between Ivy Global and American Funds
Can any of the company-specific risk be diversified away by investing in both Ivy Global and American Funds 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 Global and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivy Global Growth and American Funds Global, you can compare the effects of market volatilities on Ivy Global and American Funds 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 Global with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivy Global and American Funds.
Diversification Opportunities for Ivy Global and American Funds
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Ivy and American is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Global Growth and American Funds Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Global and Ivy Global 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 Global Growth are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Global has no effect on the direction of Ivy Global i.e., Ivy Global and American Funds go up and down completely randomly.
Pair Corralation between Ivy Global and American Funds
Assuming the 90 days horizon Ivy Global Growth is expected to generate 1.11 times more return on investment than American Funds. However, Ivy Global is 1.11 times more volatile than American Funds Global. It trades about -0.34 of its potential returns per unit of risk. American Funds Global is currently generating about -0.39 per unit of risk. If you would invest 3,673 in Ivy Global Growth on January 24, 2024 and sell it today you would lose (187.00) from holding Ivy Global Growth or give up 5.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ivy Global Growth vs. American Funds Global
Performance |
| Timeline |
| Ivy Global Growth |
| American Funds Global |
Ivy Global and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivy Global and American Funds
The main advantage of trading using opposite Ivy Global and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivy Global position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Ivy Global vs. Ivy Large Cap | Ivy Global vs. Ivy Small Cap | Ivy Global vs. Ivy High Income | Ivy Global vs. Ivy Apollo Multi Asset |
| American Funds vs. Columbia Capital Allocation | American Funds vs. Fidelity Capital Income | American Funds vs. Pace International Equity | American Funds vs. Fidelity 500 Index |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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