Correlation Between IShares Canadian and CI WisdomTree
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and CI WisdomTree 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 CI WisdomTree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian Select and CI WisdomTree Canada, you can compare the effects of market volatilities on IShares Canadian and CI WisdomTree 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 CI WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and CI WisdomTree.
Diversification Opportunities for IShares Canadian and CI WisdomTree
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and DGRC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Select and CI WisdomTree Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI WisdomTree Canada 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 Select are associated (or correlated) with CI WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI WisdomTree Canada has no effect on the direction of IShares Canadian i.e., IShares Canadian and CI WisdomTree go up and down completely randomly.
Pair Corralation between IShares Canadian and CI WisdomTree
Assuming the 90 days trading horizon iShares Canadian Select is expected to generate 0.71 times more return on investment than CI WisdomTree. However, iShares Canadian Select is 1.41 times less risky than CI WisdomTree. It trades about 0.42 of its potential returns per unit of risk. CI WisdomTree Canada is currently generating about 0.14 per unit of risk. If you would invest 2,935 in iShares Canadian Select on September 2, 2024 and sell it today you would earn a total of 330.00 from holding iShares Canadian Select or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian Select vs. CI WisdomTree Canada
Performance |
| Timeline |
| iShares Canadian Select |
| CI WisdomTree Canada |
IShares Canadian and CI WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and CI WisdomTree
The main advantage of trading using opposite IShares Canadian and CI WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, CI WisdomTree 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 WisdomTree will offset losses from the drop in CI WisdomTree's long position.| IShares Canadian vs. Vanguard FTSE Canadian | IShares Canadian vs. Vanguard SP 500 | IShares Canadian vs. iShares Core SPTSX |
| CI WisdomTree vs. Vanguard FTSE Canadian | CI WisdomTree vs. Vanguard SP 500 | CI WisdomTree vs. iShares Core SPTSX |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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