Correlation Between IShares Canadian and Desjardins
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Desjardins 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 Desjardins 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 Desjardins 1 5 Year, you can compare the effects of market volatilities on IShares Canadian and Desjardins 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 Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Desjardins.
Diversification Opportunities for IShares Canadian and Desjardins
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Desjardins is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Desjardins 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins 1 5 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 Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins 1 5 has no effect on the direction of IShares Canadian i.e., IShares Canadian and Desjardins go up and down completely randomly.
Pair Corralation between IShares Canadian and Desjardins
Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 1.85 times more return on investment than Desjardins. However, IShares Canadian is 1.85 times more volatile than Desjardins 1 5 Year. It trades about 0.08 of its potential returns per unit of risk. Desjardins 1 5 Year is currently generating about 0.08 per unit of risk. If you would invest 1,727 in iShares Canadian HYBrid on September 3, 2024 and sell it today you would earn a total of 264.00 from holding iShares Canadian HYBrid or generate 15.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. Desjardins 1 5 Year
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Desjardins 1 5 |
IShares Canadian and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Desjardins
The main advantage of trading using opposite IShares Canadian and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' 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 |
| Desjardins vs. BMO Short Federal | Desjardins vs. BMO Short Corporate | Desjardins vs. BMO Mid Corporate | Desjardins vs. BMO Long Corporate |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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