Correlation Between IShares Canadian and Shopify
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Shopify 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 Shopify 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 Shopify, you can compare the effects of market volatilities on IShares Canadian and Shopify 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 Shopify. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Shopify.
Diversification Opportunities for IShares Canadian and Shopify
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Shopify is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify 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 Shopify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shopify has no effect on the direction of IShares Canadian i.e., IShares Canadian and Shopify go up and down completely randomly.
Pair Corralation between IShares Canadian and Shopify
Assuming the 90 days trading horizon IShares Canadian is expected to generate 66.46 times less return on investment than Shopify. But when comparing it to its historical volatility, iShares Canadian HYBrid is 19.1 times less risky than Shopify. It trades about 0.1 of its potential returns per unit of risk. Shopify is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 11,097 in Shopify on August 28, 2024 and sell it today you would earn a total of 4,670 from holding Shopify or generate 42.08% 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. Shopify
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Shopify |
IShares Canadian and Shopify Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Shopify
The main advantage of trading using opposite IShares Canadian and Shopify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Shopify 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 Shopify will offset losses from the drop in Shopify'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 |
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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