Correlation Between Mackenzie Core and IShares 1
Can any of the company-specific risk be diversified away by investing in both Mackenzie Core and IShares 1 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 Core and IShares 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mackenzie Core Plus and iShares 1 10Yr Laddered, you can compare the effects of market volatilities on Mackenzie Core and IShares 1 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 Core with a short position of IShares 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Core and IShares 1.
Diversification Opportunities for Mackenzie Core and IShares 1
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mackenzie and IShares is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Core Plus and iShares 1 10Yr Laddered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 10Yr and Mackenzie Core 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 Core Plus are associated (or correlated) with IShares 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 10Yr has no effect on the direction of Mackenzie Core i.e., Mackenzie Core and IShares 1 go up and down completely randomly.
Pair Corralation between Mackenzie Core and IShares 1
Assuming the 90 days trading horizon Mackenzie Core Plus is expected to generate 1.46 times more return on investment than IShares 1. However, Mackenzie Core is 1.46 times more volatile than iShares 1 10Yr Laddered. It trades about 0.04 of its potential returns per unit of risk. iShares 1 10Yr Laddered is currently generating about -0.01 per unit of risk. If you would invest 1,641 in Mackenzie Core Plus on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Mackenzie Core Plus or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mackenzie Core Plus vs. iShares 1 10Yr Laddered
Performance |
| Timeline |
| Mackenzie Core Plus |
| iShares 1 10Yr |
Mackenzie Core and IShares 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mackenzie Core and IShares 1
The main advantage of trading using opposite Mackenzie Core and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie Core position performs unexpectedly, IShares 1 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 1 will offset losses from the drop in IShares 1's long position.The idea behind Mackenzie Core Plus and iShares 1 10Yr Laddered 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.| IShares 1 vs. Mackenzie Core Plus | IShares 1 vs. Mackenzie Unconstrained Bond | IShares 1 vs. Mackenzie Floating Rate | IShares 1 vs. Mackenzie Canadian Short |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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