Correlation Between IShares Canadian and Forum Energy
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Forum Energy 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 Forum Energy 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 Forum Energy Metals, you can compare the effects of market volatilities on IShares Canadian and Forum Energy 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 Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Forum Energy.
Diversification Opportunities for IShares Canadian and Forum Energy
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and Forum is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Forum Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Metals 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 Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Metals has no effect on the direction of IShares Canadian i.e., IShares Canadian and Forum Energy go up and down completely randomly.
Pair Corralation between IShares Canadian and Forum Energy
Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 0.05 times more return on investment than Forum Energy. However, iShares Canadian HYBrid is 22.16 times less risky than Forum Energy. It trades about 0.26 of its potential returns per unit of risk. Forum Energy Metals is currently generating about -0.22 per unit of risk. If you would invest 1,951 in iShares Canadian HYBrid on September 2, 2024 and sell it today you would earn a total of 40.00 from holding iShares Canadian HYBrid or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. Forum Energy Metals
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Forum Energy Metals |
IShares Canadian and Forum Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Forum Energy
The main advantage of trading using opposite IShares Canadian and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Forum Energy 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 Forum Energy will offset losses from the drop in Forum Energy'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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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