Correlation Between IShares Canadian and Ninepoint Energy
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Ninepoint Energy 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 Ninepoint Energy 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 Ninepoint Energy Income, you can compare the effects of market volatilities on IShares Canadian and Ninepoint Energy 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 Ninepoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Ninepoint Energy.
Diversification Opportunities for IShares Canadian and Ninepoint Energy
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Ninepoint is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Universe and Ninepoint Energy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninepoint Energy Income 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 Ninepoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninepoint Energy Income has no effect on the direction of IShares Canadian i.e., IShares Canadian and Ninepoint Energy go up and down completely randomly.
Pair Corralation between IShares Canadian and Ninepoint Energy
Assuming the 90 days trading horizon IShares Canadian is expected to generate 1.54 times less return on investment than Ninepoint Energy. But when comparing it to its historical volatility, iShares Canadian Universe is 3.23 times less risky than Ninepoint Energy. It trades about 0.04 of its potential returns per unit of risk. Ninepoint Energy Income is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,629 in Ninepoint Energy Income on December 2, 2024 and sell it today you would earn a total of 152.00 from holding Ninepoint Energy Income or generate 9.33% 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. Ninepoint Energy Income
Performance |
| Timeline |
| iShares Canadian Universe |
| Ninepoint Energy Income |
IShares Canadian and Ninepoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Ninepoint Energy
The main advantage of trading using opposite IShares Canadian and Ninepoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Ninepoint Energy 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 Ninepoint Energy will offset losses from the drop in Ninepoint Energy's long position.| IShares Canadian vs. iShares Canadian Short | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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