Correlation Between Forstrong Global and IShares SPTSX
Can any of the company-specific risk be diversified away by investing in both Forstrong Global and IShares SPTSX 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 Forstrong Global and IShares SPTSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Ex North and iShares SPTSX 60, you can compare the effects of market volatilities on Forstrong Global and IShares SPTSX 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 Forstrong Global with a short position of IShares SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and IShares SPTSX.
Diversification Opportunities for Forstrong Global and IShares SPTSX
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Forstrong and IShares is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Ex North and iShares SPTSX 60 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX 60 and Forstrong Global 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 Forstrong Global Ex North are associated (or correlated) with IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX 60 has no effect on the direction of Forstrong Global i.e., Forstrong Global and IShares SPTSX go up and down completely randomly.
Pair Corralation between Forstrong Global and IShares SPTSX
Assuming the 90 days trading horizon Forstrong Global Ex North is expected to under-perform the IShares SPTSX. In addition to that, Forstrong Global is 5.29 times more volatile than iShares SPTSX 60. It trades about -0.05 of its total potential returns per unit of risk. iShares SPTSX 60 is currently generating about 0.1 per unit of volatility. If you would invest 2,847 in iShares SPTSX 60 on August 31, 2024 and sell it today you would earn a total of 1,018 from holding iShares SPTSX 60 or generate 35.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.18% |
| Values | Daily Returns |
Forstrong Global Ex North vs. iShares SPTSX 60
Performance |
| Timeline |
| Forstrong Global |
| iShares SPTSX 60 |
Forstrong Global and IShares SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and IShares SPTSX
The main advantage of trading using opposite Forstrong Global and IShares SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global position performs unexpectedly, IShares SPTSX 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 SPTSX will offset losses from the drop in IShares SPTSX's long position.| Forstrong Global vs. iShares SPTSX 60 | Forstrong Global vs. iShares Core SP | Forstrong Global vs. iShares Core SPTSX | Forstrong Global vs. BMO Aggregate Bond |
| IShares SPTSX vs. iShares Core SP | IShares SPTSX vs. iShares Core SPTSX | IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares SPTSX Capped |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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