Correlation Between IShares Canadian and Caribbean Utilities
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Caribbean Utilities 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 Caribbean Utilities 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 Caribbean Utilities, you can compare the effects of market volatilities on IShares Canadian and Caribbean Utilities 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 Caribbean Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Caribbean Utilities.
Diversification Opportunities for IShares Canadian and Caribbean Utilities
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and Caribbean is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Caribbean Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribbean Utilities 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 Caribbean Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribbean Utilities has no effect on the direction of IShares Canadian i.e., IShares Canadian and Caribbean Utilities go up and down completely randomly.
Pair Corralation between IShares Canadian and Caribbean Utilities
Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 0.25 times more return on investment than Caribbean Utilities. However, iShares Canadian HYBrid is 4.07 times less risky than Caribbean Utilities. It trades about 0.01 of its potential returns per unit of risk. Caribbean Utilities is currently generating about -0.01 per unit of risk. If you would invest 1,953 in iShares Canadian HYBrid on August 27, 2024 and sell it today you would earn a total of 1.00 from holding iShares Canadian HYBrid or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. Caribbean Utilities
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Caribbean Utilities |
IShares Canadian and Caribbean Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Caribbean Utilities
The main advantage of trading using opposite IShares Canadian and Caribbean Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Caribbean Utilities 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 Caribbean Utilities will offset losses from the drop in Caribbean Utilities' 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 |
| Caribbean Utilities vs. Maxim Power Corp | Caribbean Utilities vs. ATCO | Caribbean Utilities vs. Capstone Infrastructure Corp | Caribbean Utilities vs. Richards Packaging Income |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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