Correlation Between IShares SPTSX and Vanguard Canadian
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX and Vanguard 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 SPTSX and Vanguard Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SPTSX Capped and Vanguard Canadian Corporate, you can compare the effects of market volatilities on IShares SPTSX and Vanguard 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 SPTSX with a short position of Vanguard Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Vanguard Canadian.
Diversification Opportunities for IShares SPTSX and Vanguard Canadian
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Vanguard is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and Vanguard Canadian Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Canadian and IShares SPTSX 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 SPTSX Capped are associated (or correlated) with Vanguard Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Canadian has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Vanguard Canadian go up and down completely randomly.
Pair Corralation between IShares SPTSX and Vanguard Canadian
Assuming the 90 days trading horizon iShares SPTSX Capped is expected to under-perform the Vanguard Canadian. In addition to that, IShares SPTSX is 5.93 times more volatile than Vanguard Canadian Corporate. It trades about -0.02 of its total potential returns per unit of risk. Vanguard Canadian Corporate is currently generating about 0.17 per unit of volatility. If you would invest 2,289 in Vanguard Canadian Corporate on August 29, 2024 and sell it today you would earn a total of 127.00 from holding Vanguard Canadian Corporate or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SPTSX Capped vs. Vanguard Canadian Corporate
Performance |
| Timeline |
| iShares SPTSX Capped |
| Vanguard Canadian |
IShares SPTSX and Vanguard Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and Vanguard Canadian
The main advantage of trading using opposite IShares SPTSX and Vanguard Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX position performs unexpectedly, Vanguard 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 Vanguard Canadian will offset losses from the drop in Vanguard Canadian's long position.| IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares SPTSX Global | IShares SPTSX vs. iShares SPTSX 60 | IShares SPTSX vs. iShares SPTSX Capped |
| Vanguard Canadian vs. BMO Long Corporate | Vanguard Canadian vs. BMO Short Corporate | Vanguard Canadian vs. BMO High Yield | Vanguard Canadian vs. BMO Short Provincial |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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