Correlation Between IShares Canadian and CI Preferred
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and CI Preferred 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 CI Preferred 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 CI Preferred Share, you can compare the effects of market volatilities on IShares Canadian and CI Preferred 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 CI Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and CI Preferred.
Diversification Opportunities for IShares Canadian and CI Preferred
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and FPR is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and CI Preferred Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Preferred Share 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 CI Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Preferred Share has no effect on the direction of IShares Canadian i.e., IShares Canadian and CI Preferred go up and down completely randomly.
Pair Corralation between IShares Canadian and CI Preferred
Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 0.77 times more return on investment than CI Preferred. However, iShares Canadian HYBrid is 1.3 times less risky than CI Preferred. It trades about 0.23 of its potential returns per unit of risk. CI Preferred Share is currently generating about 0.06 per unit of risk. If you would invest 1,955 in iShares Canadian HYBrid on September 1, 2024 and sell it today you would earn a total of 36.00 from holding iShares Canadian HYBrid or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. CI Preferred Share
Performance |
| Timeline |
| iShares Canadian HYBrid |
| CI Preferred Share |
IShares Canadian and CI Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and CI Preferred
The main advantage of trading using opposite IShares Canadian and CI Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, CI Preferred 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 CI Preferred will offset losses from the drop in CI Preferred's long position.| IShares Canadian vs. Global X Active | IShares Canadian vs. Brompton Flaherty Crumrine | IShares Canadian vs. CIBC Core Fixed | IShares Canadian vs. BMO Aggregate Bond |
| CI Preferred vs. BMO Covered Call | CI Preferred vs. Forstrong Global Income | CI Preferred vs. BMO Aggregate Bond | CI Preferred vs. iShares Canadian HYBrid |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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