Correlation Between California Municipal and Ivy Asset

Can any of the company-specific risk be diversified away by investing in both California Municipal and Ivy Asset 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 Asset 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 Asset Strategy, you can compare the effects of market volatilities on California Municipal and Ivy Asset 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 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Municipal and Ivy Asset.

Diversification Opportunities for California Municipal and Ivy Asset

0.76

Correlation Coefficient

California Municipal  Ivy Asset

Poor diversification

The 3 months correlation between California and Ivy is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding California Municipal Portfolio and Ivy Asset Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Asset Strategy 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 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Asset Strategy has no effect on the direction of California Municipal i.e., California Municipal and Ivy Asset go up and down completely randomly.

Pair Corralation between California Municipal and Ivy Asset

Assuming the 90 days horizon California Municipal is expected to generate 1.48 times less return on investment than Ivy Asset. But when comparing it to its historical volatility, California Municipal Portfolio is 3.31 times less risky than Ivy Asset. It trades about 0.33 of its potential returns per unit of risk. Ivy Asset Strategy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,324  in Ivy Asset Strategy on June 28, 2025 and sell it today you would earn a total of  75.00  from holding Ivy Asset Strategy or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

California Municipal Portfolio  vs.  Ivy Asset Strategy

California Municipal

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in California Municipal Portfolio are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. 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.

Ivy Asset Strategy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Asset Strategy are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ivy Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with California Municipal and Ivy Asset

The main advantage of trading using opposite California Municipal and Ivy Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Municipal position performs unexpectedly, Ivy Asset 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 Asset will offset losses from the drop in Ivy Asset's long position.

The idea behind California Municipal Portfolio and Ivy Asset Strategy 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.

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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.