Correlation Between Vanguard FTSE and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE 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 Vanguard FTSE and IShares Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Canada and iShares Canadian Growth, you can compare the effects of market volatilities on Vanguard FTSE 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 Vanguard FTSE with a short position of IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and IShares Canadian.
Diversification Opportunities for Vanguard FTSE and IShares Canadian
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Canada and iShares Canadian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian Growth and Vanguard FTSE 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 Vanguard FTSE Canada 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 Growth has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and IShares Canadian go up and down completely randomly.
Pair Corralation between Vanguard FTSE and IShares Canadian
Assuming the 90 days trading horizon Vanguard FTSE is expected to generate 1.65 times less return on investment than IShares Canadian. But when comparing it to its historical volatility, Vanguard FTSE Canada is 1.63 times less risky than IShares Canadian. It trades about 0.32 of its potential returns per unit of risk. iShares Canadian Growth is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 5,402 in iShares Canadian Growth on August 28, 2024 and sell it today you would earn a total of 355.00 from holding iShares Canadian Growth or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Canada vs. iShares Canadian Growth
Performance |
| Timeline |
| Vanguard FTSE Canada |
| iShares Canadian Growth |
Vanguard FTSE and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and IShares Canadian
The main advantage of trading using opposite Vanguard FTSE and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE 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.| Vanguard FTSE vs. iShares SPTSX 60 | Vanguard FTSE vs. iShares Core SP | Vanguard FTSE vs. iShares SPTSX Composite | Vanguard FTSE vs. iShares Core MSCI |
| IShares Canadian vs. iShares SPTSX 60 | IShares Canadian vs. iShares Core SP | IShares Canadian vs. iShares SPTSX Composite | IShares Canadian vs. iShares Core MSCI |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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