Correlation Between IShares Canadian and Fidelity LongShort
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Fidelity LongShort 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 IShares Canadian and Fidelity LongShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian Universe and Fidelity LongShort Alternative, you can compare the effects of market volatilities on IShares Canadian and Fidelity LongShort 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 IShares Canadian with a short position of Fidelity LongShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Fidelity LongShort.
Diversification Opportunities for IShares Canadian and Fidelity LongShort
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Fidelity is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Universe and Fidelity LongShort Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity LongShort and IShares 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 iShares Canadian Universe are associated (or correlated) with Fidelity LongShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity LongShort has no effect on the direction of IShares Canadian i.e., IShares Canadian and Fidelity LongShort go up and down completely randomly.
Pair Corralation between IShares Canadian and Fidelity LongShort
Assuming the 90 days trading horizon iShares Canadian Universe is expected to under-perform the Fidelity LongShort. But the etf apears to be less risky and, when comparing its historical volatility, iShares Canadian Universe is 1.58 times less risky than Fidelity LongShort. The etf trades about -0.13 of its potential returns per unit of risk. The Fidelity LongShort Alternative is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,112 in Fidelity LongShort Alternative on August 25, 2024 and sell it today you would earn a total of 62.00 from holding Fidelity LongShort Alternative or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian Universe vs. Fidelity LongShort Alternative
Performance |
| Timeline |
| iShares Canadian Universe |
| Fidelity LongShort |
IShares Canadian and Fidelity LongShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Fidelity LongShort
The main advantage of trading using opposite IShares Canadian and Fidelity LongShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Fidelity LongShort 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 Fidelity LongShort will offset losses from the drop in Fidelity LongShort's long position.| IShares Canadian vs. Mackenzie Core Plus | IShares Canadian vs. Mackenzie Unconstrained Bond | IShares Canadian vs. Mackenzie Floating Rate | IShares Canadian vs. Mackenzie Canadian Aggregate |
| Fidelity LongShort vs. Fidelity Global Value | Fidelity LongShort vs. Fidelity Momentum ETF | Fidelity LongShort vs. Fidelity Canadian High | Fidelity LongShort vs. Fidelity All in One Balanced |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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