Correlation Between IShares Canadian and Fidelity Canadian
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Fidelity Canadian 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 Canadian 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 Fidelity Canadian High, you can compare the effects of market volatilities on IShares Canadian and Fidelity Canadian 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 Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Fidelity Canadian.
Diversification Opportunities for IShares Canadian and Fidelity Canadian
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Select and Fidelity Canadian High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canadian High 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 Fidelity Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canadian High has no effect on the direction of IShares Canadian i.e., IShares Canadian and Fidelity Canadian go up and down completely randomly.
Pair Corralation between IShares Canadian and Fidelity Canadian
Assuming the 90 days trading horizon iShares Canadian Select is expected to generate 0.96 times more return on investment than Fidelity Canadian. However, iShares Canadian Select is 1.04 times less risky than Fidelity Canadian. It trades about 0.08 of its potential returns per unit of risk. Fidelity Canadian High is currently generating about 0.06 per unit of risk. If you would invest 2,511 in iShares Canadian Select on August 26, 2024 and sell it today you would earn a total of 721.00 from holding iShares Canadian Select or generate 28.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian Select vs. Fidelity Canadian High
Performance |
| Timeline |
| iShares Canadian Select |
| Fidelity Canadian High |
IShares Canadian and Fidelity Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Fidelity Canadian
The main advantage of trading using opposite IShares Canadian and Fidelity Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Fidelity Canadian 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 Canadian will offset losses from the drop in Fidelity Canadian's long position.| IShares Canadian vs. iShares SPTSX Canadian | IShares Canadian vs. iShares Diversified Monthly | IShares Canadian vs. iShares SPTSX Capped | IShares Canadian vs. iShares SPTSX Capped |
| Fidelity Canadian vs. iShares Diversified Monthly | Fidelity Canadian vs. iShares SPTSX Capped | Fidelity Canadian vs. iShares SPTSX Capped |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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