Correlation Between IShares SPTSX and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX and IShares 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 IShares 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 iShares Canadian Real, you can compare the effects of market volatilities on IShares SPTSX and IShares 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 IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and IShares Canadian.
Diversification Opportunities for IShares SPTSX and IShares Canadian
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and iShares Canadian Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian Real 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 IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian Real has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and IShares Canadian go up and down completely randomly.
Pair Corralation between IShares SPTSX and IShares Canadian
Assuming the 90 days trading horizon iShares SPTSX Capped is expected to generate 0.94 times more return on investment than IShares Canadian. However, iShares SPTSX Capped is 1.06 times less risky than IShares Canadian. It trades about 0.1 of its potential returns per unit of risk. iShares Canadian Real is currently generating about 0.0 per unit of risk. If you would invest 4,203 in iShares SPTSX Capped on August 28, 2024 and sell it today you would earn a total of 1,832 from holding iShares SPTSX Capped or generate 43.59% 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. iShares Canadian Real
Performance |
| Timeline |
| iShares SPTSX Capped |
| iShares Canadian Real |
IShares SPTSX and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and IShares Canadian
The main advantage of trading using opposite IShares SPTSX and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX position performs unexpectedly, IShares 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 IShares Canadian will offset losses from the drop in IShares Canadian's long position.| IShares SPTSX vs. Brompton Global Dividend | IShares SPTSX vs. Tech Leaders Income | IShares SPTSX vs. Global Healthcare Income | IShares SPTSX vs. Brompton European Dividend |
| IShares Canadian vs. iShares Canadian Short | IShares Canadian vs. iShares Canadian Government | IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Core Canadian |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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