Correlation Between Vanguard Canadian and CI Short
Can any of the company-specific risk be diversified away by investing in both Vanguard Canadian and CI Short 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 Canadian and CI Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Canadian Short and CI Short Term, you can compare the effects of market volatilities on Vanguard Canadian and CI Short 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 Canadian with a short position of CI Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Canadian and CI Short.
Diversification Opportunities for Vanguard Canadian and CI Short
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and FGB is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Canadian Short and CI Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Short Term and Vanguard 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 Vanguard Canadian Short are associated (or correlated) with CI Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Short Term has no effect on the direction of Vanguard Canadian i.e., Vanguard Canadian and CI Short go up and down completely randomly.
Pair Corralation between Vanguard Canadian and CI Short
Assuming the 90 days trading horizon Vanguard Canadian Short is expected to generate 0.93 times more return on investment than CI Short. However, Vanguard Canadian Short is 1.08 times less risky than CI Short. It trades about 0.16 of its potential returns per unit of risk. CI Short Term is currently generating about 0.12 per unit of risk. If you would invest 2,216 in Vanguard Canadian Short on August 29, 2024 and sell it today you would earn a total of 103.00 from holding Vanguard Canadian Short or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Canadian Short vs. CI Short Term
Performance |
| Timeline |
| Vanguard Canadian Short |
| CI Short Term |
Vanguard Canadian and CI Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Canadian and CI Short
The main advantage of trading using opposite Vanguard Canadian and CI Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Canadian position performs unexpectedly, CI Short 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 CI Short will offset losses from the drop in CI Short's long position.| Vanguard Canadian vs. Vanguard Canadian Short Term | Vanguard Canadian vs. Vanguard Canadian Aggregate | Vanguard Canadian vs. iShares Canadian Short | Vanguard Canadian vs. Vanguard FTSE Developed |
| CI Short vs. CI Enhanced Short | CI Short vs. CI Preferred Share | CI Short vs. CI Global Financial | CI Short vs. CI Investment Grade |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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