Correlation Between IShares Core and Dynamic Active
Can any of the company-specific risk be diversified away by investing in both IShares Core and Dynamic Active 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 Core and Dynamic Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Canadian and Dynamic Active Preferred, you can compare the effects of market volatilities on IShares Core and Dynamic Active 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 Core with a short position of Dynamic Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Dynamic Active.
Diversification Opportunities for IShares Core and Dynamic Active
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Dynamic is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Canadian and Dynamic Active Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Preferred and IShares Core 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 Core Canadian are associated (or correlated) with Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Preferred has no effect on the direction of IShares Core i.e., IShares Core and Dynamic Active go up and down completely randomly.
Pair Corralation between IShares Core and Dynamic Active
Assuming the 90 days trading horizon IShares Core is expected to generate 2.89 times less return on investment than Dynamic Active. In addition to that, IShares Core is 1.58 times more volatile than Dynamic Active Preferred. It trades about 0.19 of its total potential returns per unit of risk. Dynamic Active Preferred is currently generating about 0.85 per unit of volatility. If you would invest 2,189 in Dynamic Active Preferred on September 13, 2024 and sell it today you would earn a total of 100.00 from holding Dynamic Active Preferred or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Canadian vs. Dynamic Active Preferred
Performance |
| Timeline |
| iShares Core Canadian |
| Dynamic Active Preferred |
IShares Core and Dynamic Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Dynamic Active
The main advantage of trading using opposite IShares Core and Dynamic Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Dynamic Active 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 Dynamic Active will offset losses from the drop in Dynamic Active's long position.| IShares Core vs. BMO Mid Corporate | IShares Core vs. Global X Active | IShares Core vs. iShares 1 10Yr Laddered | IShares Core vs. RBC Target 2026 |
| Dynamic Active vs. Dynamic Active Global | Dynamic Active vs. Dynamic Active Dividend | Dynamic Active vs. Dynamic Active Canadian | Dynamic Active vs. Global X Active |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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