Correlation Between IShares Canadian and Freehold Royalties
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Freehold Royalties 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 Freehold Royalties 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 Freehold Royalties, you can compare the effects of market volatilities on IShares Canadian and Freehold Royalties 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 Freehold Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Freehold Royalties.
Diversification Opportunities for IShares Canadian and Freehold Royalties
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Freehold is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Freehold Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freehold Royalties 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 Freehold Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freehold Royalties has no effect on the direction of IShares Canadian i.e., IShares Canadian and Freehold Royalties go up and down completely randomly.
Pair Corralation between IShares Canadian and Freehold Royalties
Assuming the 90 days trading horizon IShares Canadian is expected to generate 4.32 times less return on investment than Freehold Royalties. But when comparing it to its historical volatility, iShares Canadian HYBrid is 3.18 times less risky than Freehold Royalties. It trades about 0.1 of its potential returns per unit of risk. Freehold Royalties is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,371 in Freehold Royalties on August 29, 2024 and sell it today you would earn a total of 33.00 from holding Freehold Royalties or generate 2.41% 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. Freehold Royalties
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Freehold Royalties |
IShares Canadian and Freehold Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Freehold Royalties
The main advantage of trading using opposite IShares Canadian and Freehold Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Freehold Royalties 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 Freehold Royalties will offset losses from the drop in Freehold Royalties' 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 |
| Freehold Royalties vs. Canadian Natural Resources | Freehold Royalties vs. Suncor Energy | Freehold Royalties vs. iShares Canadian HYBrid | Freehold Royalties vs. Altagas Cum Red |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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