Correlation Between IShares Fundamental and Extendicare
Can any of the company-specific risk be diversified away by investing in both IShares Fundamental and Extendicare 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 IShares Fundamental and Extendicare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Fundamental Hedged and Extendicare, you can compare the effects of market volatilities on IShares Fundamental and Extendicare 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 IShares Fundamental with a short position of Extendicare. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Fundamental and Extendicare.
Diversification Opportunities for IShares Fundamental and Extendicare
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Extendicare is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Extendicare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extendicare and IShares Fundamental 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 iShares Fundamental Hedged are associated (or correlated) with Extendicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extendicare has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and Extendicare go up and down completely randomly.
Pair Corralation between IShares Fundamental and Extendicare
Assuming the 90 days trading horizon IShares Fundamental is expected to generate 2.58 times less return on investment than Extendicare. But when comparing it to its historical volatility, iShares Fundamental Hedged is 2.35 times less risky than Extendicare. It trades about 0.33 of its potential returns per unit of risk. Extendicare is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 917.00 in Extendicare on September 1, 2024 and sell it today you would earn a total of 145.00 from holding Extendicare or generate 15.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Fundamental Hedged vs. Extendicare
Performance |
| Timeline |
| iShares Fundamental |
| Extendicare |
IShares Fundamental and Extendicare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Fundamental and Extendicare
The main advantage of trading using opposite IShares Fundamental and Extendicare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Fundamental position performs unexpectedly, Extendicare 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 Extendicare will offset losses from the drop in Extendicare's long position.| IShares Fundamental vs. Brompton Global Dividend | IShares Fundamental vs. Global Healthcare Income | IShares Fundamental vs. Tech Leaders Income | IShares Fundamental vs. Brompton North American |
| Extendicare vs. Sienna Senior Living | Extendicare vs. Chartwell Retirement Residences | Extendicare vs. Chemtrade Logistics Income | Extendicare vs. NorthWest Healthcare Properties |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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