Correlation Between IShares Canadian and CI WisdomTree
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and CI WisdomTree 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 WisdomTree 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 WisdomTree Japan, you can compare the effects of market volatilities on IShares Canadian and CI WisdomTree 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 WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and CI WisdomTree.
Diversification Opportunities for IShares Canadian and CI WisdomTree
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and JAPN is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and CI WisdomTree Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI WisdomTree Japan 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 WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI WisdomTree Japan has no effect on the direction of IShares Canadian i.e., IShares Canadian and CI WisdomTree go up and down completely randomly.
Pair Corralation between IShares Canadian and CI WisdomTree
Assuming the 90 days trading horizon IShares Canadian is expected to generate 3.89 times less return on investment than CI WisdomTree. But when comparing it to its historical volatility, iShares Canadian HYBrid is 2.93 times less risky than CI WisdomTree. It trades about 0.08 of its potential returns per unit of risk. CI WisdomTree Japan is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,858 in CI WisdomTree Japan on September 4, 2024 and sell it today you would earn a total of 2,042 from holding CI WisdomTree Japan or generate 71.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. CI WisdomTree Japan
Performance |
| Timeline |
| iShares Canadian HYBrid |
| CI WisdomTree Japan |
IShares Canadian and CI WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and CI WisdomTree
The main advantage of trading using opposite IShares Canadian and CI WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, CI WisdomTree 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 WisdomTree will offset losses from the drop in CI WisdomTree'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 |
| CI WisdomTree vs. BMO Aggregate Bond | CI WisdomTree vs. iShares Canadian HYBrid | CI WisdomTree vs. Brompton European Dividend | CI WisdomTree vs. Solar Alliance Energy |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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