Correlation Between Ivy Asset and Optimum International

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

Diversification Opportunities for Ivy Asset and Optimum International

0.81

Correlation Coefficient

Ivy Asset  Optimum International

Very poor diversification

The 3 months correlation between Ivy and Optimum is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Asset Strategy and Optimum International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum International 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 Optimum International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum International has no effect on the direction of Ivy Asset i.e., Ivy Asset and Optimum International go up and down completely randomly.

Pair Corralation between Ivy Asset and Optimum International

Assuming the 90 days horizon Ivy Asset Strategy is expected to under-perform the Optimum International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ivy Asset Strategy is 1.3 times less risky than Optimum International. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Optimum International Fund is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,349  in Optimum International Fund on January 23, 2025 and sell it today you would lose (35.00) from holding Optimum International Fund or give up 2.59% of portfolio value over 90 days.

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

Ivy Asset Strategy  vs.  Optimum International Fund

Ivy Asset Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivy Asset Strategy has generated negative risk-adjusted returns adding no value to fund investors. 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.

Optimum International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Optimum International Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Optimum International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ivy Asset and Optimum International

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

The idea behind Ivy Asset Strategy and Optimum International Fund 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 Global Correlations module to find global opportunities by holding instruments from different markets.