Correlation Between Mackenzie Canadian and IShares Floating
Can any of the company-specific risk be diversified away by investing in both Mackenzie Canadian and IShares Floating 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 Mackenzie Canadian and IShares Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mackenzie Canadian Short and iShares Floating Rate, you can compare the effects of market volatilities on Mackenzie Canadian and IShares Floating 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 Mackenzie Canadian with a short position of IShares Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Canadian and IShares Floating.
Diversification Opportunities for Mackenzie Canadian and IShares Floating
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mackenzie and IShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Canadian Short and iShares Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Floating Rate and Mackenzie 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 Mackenzie Canadian Short are associated (or correlated) with IShares Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Floating Rate has no effect on the direction of Mackenzie Canadian i.e., Mackenzie Canadian and IShares Floating go up and down completely randomly.
Pair Corralation between Mackenzie Canadian and IShares Floating
Assuming the 90 days trading horizon Mackenzie Canadian is expected to generate 2.43 times less return on investment than IShares Floating. In addition to that, Mackenzie Canadian is 3.75 times more volatile than iShares Floating Rate. It trades about 0.03 of its total potential returns per unit of risk. iShares Floating Rate is currently generating about 0.28 per unit of volatility. If you would invest 1,998 in iShares Floating Rate on August 29, 2024 and sell it today you would earn a total of 5.00 from holding iShares Floating Rate or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mackenzie Canadian Short vs. iShares Floating Rate
Performance |
| Timeline |
| Mackenzie Canadian Short |
| iShares Floating Rate |
Mackenzie Canadian and IShares Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mackenzie Canadian and IShares Floating
The main advantage of trading using opposite Mackenzie Canadian and IShares Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie Canadian position performs unexpectedly, IShares Floating 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 Floating will offset losses from the drop in IShares Floating's long position.| Mackenzie Canadian vs. Mackenzie Canadian Aggregate | Mackenzie Canadian vs. Mackenzie Core Plus | Mackenzie Canadian vs. Mackenzie Investment Grade | Mackenzie Canadian vs. Mackenzie Core Plus |
| IShares Floating vs. iShares 1 10Yr Laddered | IShares Floating vs. iShares JP Morgan | IShares Floating vs. iShares Convertible Bond | IShares Floating vs. iShares IG Corporate |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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