Correlation Between Big Rock and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both Big Rock and IShares Canadian 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 Big Rock and IShares Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Rock Brewery and iShares Canadian HYBrid, you can compare the effects of market volatilities on Big Rock and IShares Canadian 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 Big Rock with a short position of IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and IShares Canadian.
Diversification Opportunities for Big Rock and IShares Canadian
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Big and IShares is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and iShares Canadian HYBrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian HYBrid and Big Rock 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 Big Rock Brewery are associated (or correlated) with IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian HYBrid has no effect on the direction of Big Rock i.e., Big Rock and IShares Canadian go up and down completely randomly.
Pair Corralation between Big Rock and IShares Canadian
Assuming the 90 days horizon Big Rock Brewery is expected to generate 14.05 times more return on investment than IShares Canadian. However, Big Rock is 14.05 times more volatile than iShares Canadian HYBrid. It trades about 0.14 of its potential returns per unit of risk. iShares Canadian HYBrid is currently generating about 0.18 per unit of risk. If you would invest 110.00 in Big Rock Brewery on September 13, 2024 and sell it today you would earn a total of 14.00 from holding Big Rock Brewery or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Rock Brewery vs. iShares Canadian HYBrid
Performance |
| Timeline |
| Big Rock Brewery |
| iShares Canadian HYBrid |
Big Rock and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Rock and IShares Canadian
The main advantage of trading using opposite Big Rock and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Rock position performs unexpectedly, IShares Canadian 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 IShares Canadian will offset losses from the drop in IShares Canadian's long position.| Big Rock vs. Corby Spirit and | Big Rock vs. Gamehost | Big Rock vs. Andrew Peller Limited | Big Rock vs. Buhler Industries |
| IShares Canadian vs. iShares IG Corporate | IShares Canadian vs. iShares High Yield | IShares Canadian vs. iShares Floating Rate | IShares Canadian vs. iShares JP Morgan |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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