Correlation Between Vanguard Canadian and IA Clarington
Can any of the company-specific risk be diversified away by investing in both Vanguard Canadian and IA Clarington 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 IA Clarington 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 IA Clarington Core, you can compare the effects of market volatilities on Vanguard Canadian and IA Clarington 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 IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Canadian and IA Clarington.
Diversification Opportunities for Vanguard Canadian and IA Clarington
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and ICPB is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Canadian Short and IA Clarington Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Core 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 IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Core has no effect on the direction of Vanguard Canadian i.e., Vanguard Canadian and IA Clarington go up and down completely randomly.
Pair Corralation between Vanguard Canadian and IA Clarington
Assuming the 90 days trading horizon Vanguard Canadian Short is expected to under-perform the IA Clarington. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Canadian Short is 2.08 times less risky than IA Clarington. The etf trades about -0.19 of its potential returns per unit of risk. The IA Clarington Core is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 945.00 in IA Clarington Core on August 25, 2024 and sell it today you would earn a total of 2.00 from holding IA Clarington Core or generate 0.21% 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. IA Clarington Core
Performance |
| Timeline |
| Vanguard Canadian Short |
| IA Clarington Core |
Vanguard Canadian and IA Clarington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Canadian and IA Clarington
The main advantage of trading using opposite Vanguard Canadian and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Canadian position performs unexpectedly, IA Clarington 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 IA Clarington will offset losses from the drop in IA Clarington's long position.| Vanguard Canadian vs. Mackenzie Canadian Aggregate | Vanguard Canadian vs. Mackenzie Canadian Short | Vanguard Canadian vs. Mackenzie Core Plus | Vanguard Canadian vs. Mackenzie Investment Grade |
| IA Clarington vs. Mackenzie Canadian Aggregate | IA Clarington vs. Mackenzie Canadian Short | IA Clarington vs. Mackenzie Core Plus | IA Clarington vs. Mackenzie 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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