Correlation Between Dynamic Active and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both Dynamic Active 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 Dynamic Active and IShares Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynamic Active Global and iShares Canadian Select, you can compare the effects of market volatilities on Dynamic Active 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 Dynamic Active with a short position of IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Active and IShares Canadian.
Diversification Opportunities for Dynamic Active and IShares Canadian
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dynamic and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Active Global and iShares Canadian Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian Select and Dynamic Active 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 Dynamic Active Global 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 Select has no effect on the direction of Dynamic Active i.e., Dynamic Active and IShares Canadian go up and down completely randomly.
Pair Corralation between Dynamic Active and IShares Canadian
Assuming the 90 days trading horizon Dynamic Active Global is expected to generate 1.95 times more return on investment than IShares Canadian. However, Dynamic Active is 1.95 times more volatile than iShares Canadian Select. It trades about 0.13 of its potential returns per unit of risk. iShares Canadian Select is currently generating about 0.18 per unit of risk. If you would invest 4,912 in Dynamic Active Global on September 3, 2024 and sell it today you would earn a total of 1,909 from holding Dynamic Active Global or generate 38.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynamic Active Global vs. iShares Canadian Select
Performance |
| Timeline |
| Dynamic Active Global |
| iShares Canadian Select |
Dynamic Active and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynamic Active and IShares Canadian
The main advantage of trading using opposite Dynamic Active and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Active 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.| Dynamic Active vs. Dynamic Active Dividend | Dynamic Active vs. Dynamic Active Canadian | Dynamic Active vs. BMO MSCI All | Dynamic Active vs. Dynamic Active Preferred |
| IShares Canadian vs. Dynamic Active Global | IShares Canadian vs. Dynamic Active Dividend | IShares Canadian vs. Dynamic Active Preferred | IShares Canadian vs. Dynamic Active Crossover |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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