Correlation Between IShares Canadian and First Mining
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and First Mining 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 First Mining 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 First Mining Gold, you can compare the effects of market volatilities on IShares Canadian and First Mining 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 First Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and First Mining.
Diversification Opportunities for IShares Canadian and First Mining
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining Gold 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 First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of IShares Canadian i.e., IShares Canadian and First Mining go up and down completely randomly.
Pair Corralation between IShares Canadian and First Mining
Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to under-perform the First Mining. But the etf apears to be less risky and, when comparing its historical volatility, iShares Canadian HYBrid is 7.26 times less risky than First Mining. The etf trades about -0.01 of its potential returns per unit of risk. The First Mining Gold is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 12.00 in First Mining Gold on October 29, 2024 and sell it today you would earn a total of 1.00 from holding First Mining Gold or generate 8.33% 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. First Mining Gold
Performance |
| Timeline |
| iShares Canadian HYBrid |
| First Mining Gold |
IShares Canadian and First Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and First Mining
The main advantage of trading using opposite IShares Canadian and First Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, First Mining 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 First Mining will offset losses from the drop in First Mining'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 Stocks Directory module to find actively traded stocks across global markets.
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