Correlation Between BetaPro Canadian and Mackenzie Global
Can any of the company-specific risk be diversified away by investing in both BetaPro Canadian and Mackenzie Global 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 BetaPro Canadian and Mackenzie Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro Canadian Gold and Mackenzie Global Fixed, you can compare the effects of market volatilities on BetaPro Canadian and Mackenzie Global 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 BetaPro Canadian with a short position of Mackenzie Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Canadian and Mackenzie Global.
Diversification Opportunities for BetaPro Canadian and Mackenzie Global
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BetaPro and Mackenzie is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Canadian Gold and Mackenzie Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Global Fixed and BetaPro 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 BetaPro Canadian Gold are associated (or correlated) with Mackenzie Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Global Fixed has no effect on the direction of BetaPro Canadian i.e., BetaPro Canadian and Mackenzie Global go up and down completely randomly.
Pair Corralation between BetaPro Canadian and Mackenzie Global
Assuming the 90 days trading horizon BetaPro Canadian Gold is expected to under-perform the Mackenzie Global. In addition to that, BetaPro Canadian is 13.58 times more volatile than Mackenzie Global Fixed. It trades about -0.12 of its total potential returns per unit of risk. Mackenzie Global Fixed is currently generating about -0.12 per unit of volatility. If you would invest 1,712 in Mackenzie Global Fixed on August 29, 2024 and sell it today you would lose (15.00) from holding Mackenzie Global Fixed or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro Canadian Gold vs. Mackenzie Global Fixed
Performance |
| Timeline |
| BetaPro Canadian Gold |
| Mackenzie Global Fixed |
BetaPro Canadian and Mackenzie Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro Canadian and Mackenzie Global
The main advantage of trading using opposite BetaPro Canadian and Mackenzie Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Canadian position performs unexpectedly, Mackenzie Global 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 Mackenzie Global will offset losses from the drop in Mackenzie Global's long position.The idea behind BetaPro Canadian Gold and Mackenzie Global Fixed pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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