Correlation Between Extendicare and IShares Fundamental
Can any of the company-specific risk be diversified away by investing in both Extendicare and IShares Fundamental 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 Extendicare and IShares Fundamental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extendicare and iShares Fundamental Hedged, you can compare the effects of market volatilities on Extendicare and IShares Fundamental 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 Extendicare with a short position of IShares Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extendicare and IShares Fundamental.
Diversification Opportunities for Extendicare and IShares Fundamental
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Extendicare and IShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Extendicare and iShares Fundamental Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Fundamental and Extendicare 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 Extendicare are associated (or correlated) with IShares Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Fundamental has no effect on the direction of Extendicare i.e., Extendicare and IShares Fundamental go up and down completely randomly.
Pair Corralation between Extendicare and IShares Fundamental
Assuming the 90 days trading horizon Extendicare is expected to generate 2.3 times more return on investment than IShares Fundamental. However, Extendicare is 2.3 times more volatile than iShares Fundamental Hedged. It trades about 0.4 of its potential returns per unit of risk. iShares Fundamental Hedged is currently generating about 0.35 per unit of risk. If you would invest 909.00 in Extendicare on September 3, 2024 and sell it today you would earn a total of 153.00 from holding Extendicare or generate 16.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extendicare vs. iShares Fundamental Hedged
Performance |
| Timeline |
| Extendicare |
| iShares Fundamental |
Extendicare and IShares Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extendicare and IShares Fundamental
The main advantage of trading using opposite Extendicare and IShares Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extendicare position performs unexpectedly, IShares Fundamental 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 Fundamental will offset losses from the drop in IShares Fundamental's long position.| Extendicare vs. Sienna Senior Living | Extendicare vs. Chartwell Retirement Residences | Extendicare vs. Chemtrade Logistics Income | Extendicare vs. NorthWest Healthcare Properties |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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