Correlation Between IShares Canadian and Accelerate Arbitrage
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Accelerate Arbitrage 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 Accelerate Arbitrage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian HYBrid and Accelerate Arbitrage, you can compare the effects of market volatilities on IShares Canadian and Accelerate Arbitrage 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 Accelerate Arbitrage. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Accelerate Arbitrage.
Diversification Opportunities for IShares Canadian and Accelerate Arbitrage
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Accelerate is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Accelerate Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accelerate Arbitrage 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 HYBrid are associated (or correlated) with Accelerate Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accelerate Arbitrage has no effect on the direction of IShares Canadian i.e., IShares Canadian and Accelerate Arbitrage go up and down completely randomly.
Pair Corralation between IShares Canadian and Accelerate Arbitrage
Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 0.75 times more return on investment than Accelerate Arbitrage. However, iShares Canadian HYBrid is 1.34 times less risky than Accelerate Arbitrage. It trades about 0.13 of its potential returns per unit of risk. Accelerate Arbitrage is currently generating about 0.06 per unit of risk. If you would invest 1,802 in iShares Canadian HYBrid on September 2, 2024 and sell it today you would earn a total of 189.00 from holding iShares Canadian HYBrid or generate 10.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. Accelerate Arbitrage
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Accelerate Arbitrage |
IShares Canadian and Accelerate Arbitrage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Accelerate Arbitrage
The main advantage of trading using opposite IShares Canadian and Accelerate Arbitrage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Accelerate Arbitrage 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 Accelerate Arbitrage will offset losses from the drop in Accelerate Arbitrage's long position.| IShares Canadian vs. iShares IG Corporate | IShares Canadian vs. iShares High Yield | IShares Canadian vs. iShares Floating Rate | IShares Canadian vs. iShares JP Morgan |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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