Correlation Between IShares Trust and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and IShares Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and iShares Canadian Short, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and IShares Canadian.
Diversification Opportunities for IShares Trust and IShares Canadian
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and IShares is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and iShares Canadian Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian Short and IShares Trust 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 Trust 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 Short has no effect on the direction of IShares Trust i.e., IShares Trust and IShares Canadian go up and down completely randomly.
Pair Corralation between IShares Trust and IShares Canadian
Assuming the 90 days trading horizon IShares Trust is expected to generate 1.08 times less return on investment than IShares Canadian. But when comparing it to its historical volatility, iShares Trust is 1.02 times less risky than IShares Canadian. It trades about 0.09 of its potential returns per unit of risk. iShares Canadian Short is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 33,039 in iShares Canadian Short on September 2, 2024 and sell it today you would earn a total of 5,099 from holding iShares Canadian Short or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares Trust vs. iShares Canadian Short
Performance |
| Timeline |
| iShares Trust |
| iShares Canadian Short |
IShares Trust and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and IShares Canadian
The main advantage of trading using opposite IShares Trust and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
| IShares Canadian vs. iShares Trust | IShares Canadian vs. iShares Trust | IShares Canadian vs. iShares Trust | IShares Canadian vs. iShares Trust |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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