Correlation Between Desjardins Canadian and IShares 1
Can any of the company-specific risk be diversified away by investing in both Desjardins Canadian and IShares 1 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 Desjardins Canadian and IShares 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins Canadian Preferred and iShares 1 5 Year, you can compare the effects of market volatilities on Desjardins Canadian and IShares 1 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 Desjardins Canadian with a short position of IShares 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins Canadian and IShares 1.
Diversification Opportunities for Desjardins Canadian and IShares 1
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Desjardins and IShares is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins Canadian Preferred and iShares 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 5 and Desjardins Canadian 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 Desjardins Canadian Preferred are associated (or correlated) with IShares 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 5 has no effect on the direction of Desjardins Canadian i.e., Desjardins Canadian and IShares 1 go up and down completely randomly.
Pair Corralation between Desjardins Canadian and IShares 1
Assuming the 90 days trading horizon Desjardins Canadian Preferred is expected to generate 1.52 times more return on investment than IShares 1. However, Desjardins Canadian is 1.52 times more volatile than iShares 1 5 Year. It trades about 0.47 of its potential returns per unit of risk. iShares 1 5 Year is currently generating about 0.16 per unit of risk. If you would invest 1,876 in Desjardins Canadian Preferred on September 12, 2024 and sell it today you would earn a total of 62.00 from holding Desjardins Canadian Preferred or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Desjardins Canadian Preferred vs. iShares 1 5 Year
Performance |
| Timeline |
| Desjardins Canadian |
| iShares 1 5 |
Desjardins Canadian and IShares 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins Canadian and IShares 1
The main advantage of trading using opposite Desjardins Canadian and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins Canadian position performs unexpectedly, IShares 1 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 1 will offset losses from the drop in IShares 1's long position.| Desjardins Canadian vs. iShares 1 5 Year | Desjardins Canadian vs. iShares 1 5 Year | Desjardins Canadian vs. iShares Core Canadian | Desjardins Canadian vs. iShares Global Monthly |
| IShares 1 vs. iShares 1 5 Year | IShares 1 vs. iShares SPTSX Canadian | IShares 1 vs. iShares Core Canadian | IShares 1 vs. iShares High Yield |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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