Correlation Between IShares Canadian and Faraday Copper
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Faraday Copper 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 Faraday Copper 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 Faraday Copper Corp, you can compare the effects of market volatilities on IShares Canadian and Faraday Copper 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 Faraday Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Faraday Copper.
Diversification Opportunities for IShares Canadian and Faraday Copper
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Faraday is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Faraday Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faraday Copper Corp 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 Faraday Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faraday Copper Corp has no effect on the direction of IShares Canadian i.e., IShares Canadian and Faraday Copper go up and down completely randomly.
Pair Corralation between IShares Canadian and Faraday Copper
Assuming the 90 days trading horizon IShares Canadian is expected to generate 2.04 times less return on investment than Faraday Copper. But when comparing it to its historical volatility, iShares Canadian HYBrid is 9.42 times less risky than Faraday Copper. It trades about 0.11 of its potential returns per unit of risk. Faraday Copper Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 75.00 in Faraday Copper Corp on September 2, 2024 and sell it today you would earn a total of 8.00 from holding Faraday Copper Corp or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. Faraday Copper Corp
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Faraday Copper Corp |
IShares Canadian and Faraday Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Faraday Copper
The main advantage of trading using opposite IShares Canadian and Faraday Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Faraday Copper 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 Faraday Copper will offset losses from the drop in Faraday Copper'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 |
| Faraday Copper vs. First Majestic Silver | Faraday Copper vs. Ivanhoe Energy | Faraday Copper vs. Orezone Gold Corp |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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