Correlation Between Mackenzie International and Mackenzie Canadian
Can any of the company-specific risk be diversified away by investing in both Mackenzie International and Mackenzie 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 Mackenzie International and Mackenzie Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mackenzie International Equity and Mackenzie Canadian Large, you can compare the effects of market volatilities on Mackenzie International and Mackenzie 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 Mackenzie International with a short position of Mackenzie Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie International and Mackenzie Canadian.
Diversification Opportunities for Mackenzie International and Mackenzie Canadian
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mackenzie and Mackenzie is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie International Equity and Mackenzie Canadian Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Canadian Large and Mackenzie International 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 International Equity are associated (or correlated) with Mackenzie Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Canadian Large has no effect on the direction of Mackenzie International i.e., Mackenzie International and Mackenzie Canadian go up and down completely randomly.
Pair Corralation between Mackenzie International and Mackenzie Canadian
Assuming the 90 days trading horizon Mackenzie International is expected to generate 1.18 times less return on investment than Mackenzie Canadian. But when comparing it to its historical volatility, Mackenzie International Equity is 1.01 times less risky than Mackenzie Canadian. It trades about 0.08 of its potential returns per unit of risk. Mackenzie Canadian Large is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 11,507 in Mackenzie Canadian Large on November 27, 2024 and sell it today you would earn a total of 3,856 from holding Mackenzie Canadian Large or generate 33.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mackenzie International Equity vs. Mackenzie Canadian Large
Performance |
| Timeline |
| Mackenzie International |
| Mackenzie Canadian Large |
Mackenzie International and Mackenzie Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mackenzie International and Mackenzie Canadian
The main advantage of trading using opposite Mackenzie International and Mackenzie Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie International position performs unexpectedly, Mackenzie 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 Mackenzie Canadian will offset losses from the drop in Mackenzie Canadian's long position.The idea behind Mackenzie International Equity and Mackenzie Canadian Large 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.
| Mackenzie Canadian vs. Mackenzie Large Cap | Mackenzie Canadian vs. Mackenzie International Equity | Mackenzie Canadian vs. Mackenzie Canadian Equity | Mackenzie Canadian vs. Mackenzie Canadian Aggregate |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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