Correlation Between IShares Canadian and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Maple Leaf 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 Maple Leaf 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 Maple Leaf Foods, you can compare the effects of market volatilities on IShares Canadian and Maple Leaf 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 Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Maple Leaf.
Diversification Opportunities for IShares Canadian and Maple Leaf
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Maple is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods 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 Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of IShares Canadian i.e., IShares Canadian and Maple Leaf go up and down completely randomly.
Pair Corralation between IShares Canadian and Maple Leaf
Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 0.2 times more return on investment than Maple Leaf. However, iShares Canadian HYBrid is 4.98 times less risky than Maple Leaf. It trades about 0.09 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.0 per unit of risk. If you would invest 1,733 in iShares Canadian HYBrid on August 31, 2024 and sell it today you would earn a total of 237.00 from holding iShares Canadian HYBrid or generate 13.68% 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. Maple Leaf Foods
Performance |
Timeline |
iShares Canadian HYBrid |
Maple Leaf Foods |
IShares Canadian and Maple Leaf Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Canadian and Maple Leaf
The main advantage of trading using opposite IShares Canadian and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Maple Leaf 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 Maple Leaf will offset losses from the drop in Maple Leaf'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 |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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