Correlation Between IShares Canadian and Open Text
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Open Text 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 Open Text 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 Open Text Corp, you can compare the effects of market volatilities on IShares Canadian and Open Text 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 Open Text. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Open Text.
Diversification Opportunities for IShares Canadian and Open Text
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Open is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Open Text Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Text Corp 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 Open Text. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Text Corp has no effect on the direction of IShares Canadian i.e., IShares Canadian and Open Text go up and down completely randomly.
Pair Corralation between IShares Canadian and Open Text
Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 0.21 times more return on investment than Open Text. However, iShares Canadian HYBrid is 4.83 times less risky than Open Text. It trades about 0.17 of its potential returns per unit of risk. Open Text Corp is currently generating about -0.01 per unit of risk. If you would invest 1,634 in iShares Canadian HYBrid on September 12, 2024 and sell it today you would earn a total of 364.00 from holding iShares Canadian HYBrid or generate 22.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. Open Text Corp
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Open Text Corp |
IShares Canadian and Open Text Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Open Text
The main advantage of trading using opposite IShares Canadian and Open Text positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Open Text 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 Open Text will offset losses from the drop in Open Text'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 |
| Open Text vs. Apple Inc CDR | Open Text vs. NVIDIA CDR | Open Text vs. Microsoft Corp CDR | Open Text vs. Amazon CDR |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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