Correlation Between IShares Canadian and IShares SPTSX
Can any of the company-specific risk be diversified away by investing in both IShares Canadian 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 IShares Canadian and IShares SPTSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IShares Canadian HYBrid and IShares SPTSX Capped, you can compare the effects of market volatilities on IShares Canadian 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 IShares Canadian with a short position of IShares SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and IShares SPTSX.
Diversification Opportunities for IShares Canadian and IShares SPTSX
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IShares Canadian HYBrid and IShares SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares SPTSX Capped and IShares 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 IShares Canadian HYBrid 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 Capped has no effect on the direction of IShares Canadian i.e., IShares Canadian and IShares SPTSX go up and down completely randomly.
Pair Corralation between IShares Canadian and IShares SPTSX
If you would invest (100.00) in IShares SPTSX Capped on August 29, 2024 and sell it today you would earn a total of 100.00 from holding IShares SPTSX Capped or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IShares Canadian HYBrid vs. IShares SPTSX Capped
Performance |
| Timeline |
| IShares Canadian HYBrid |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| IShares SPTSX Capped |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares Canadian and IShares SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and IShares SPTSX
The main advantage of trading using opposite IShares Canadian and IShares SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian 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.The idea behind IShares Canadian HYBrid and IShares SPTSX Capped 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 Stocks Directory module to find actively traded stocks across global markets.
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