Correlation Between IShares Convertible and CI Canadian
Can any of the company-specific risk be diversified away by investing in both IShares Convertible and CI 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 IShares Convertible and CI Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Convertible Bond and CI Canadian Convertible, you can compare the effects of market volatilities on IShares Convertible and CI 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 IShares Convertible with a short position of CI Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Convertible and CI Canadian.
Diversification Opportunities for IShares Convertible and CI Canadian
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and CXF is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares Convertible Bond and CI Canadian Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canadian Convertible and IShares Convertible 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 Convertible Bond are associated (or correlated) with CI Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canadian Convertible has no effect on the direction of IShares Convertible i.e., IShares Convertible and CI Canadian go up and down completely randomly.
Pair Corralation between IShares Convertible and CI Canadian
Assuming the 90 days trading horizon IShares Convertible is expected to generate 5.13 times less return on investment than CI Canadian. But when comparing it to its historical volatility, iShares Convertible Bond is 2.23 times less risky than CI Canadian. It trades about 0.01 of its potential returns per unit of risk. CI Canadian Convertible is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,005 in CI Canadian Convertible on August 29, 2024 and sell it today you would earn a total of 6.00 from holding CI Canadian Convertible or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Convertible Bond vs. CI Canadian Convertible
Performance |
| Timeline |
| iShares Convertible Bond |
| CI Canadian Convertible |
IShares Convertible and CI Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Convertible and CI Canadian
The main advantage of trading using opposite IShares Convertible and CI Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Convertible position performs unexpectedly, CI 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 CI Canadian will offset losses from the drop in CI Canadian's long position.| IShares Convertible vs. iShares 1 10Yr Laddered | IShares Convertible vs. CI Canadian Convertible | IShares Convertible vs. iShares Floating Rate | IShares Convertible vs. iShares JP Morgan |
| CI Canadian vs. Franklin Global Aggregate | CI Canadian vs. Franklin Large Cap | CI Canadian vs. First Trust Senior | CI Canadian vs. BMO Aggregate Bond |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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