Correlation Between IShares Canadian and Sparx Technology
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Sparx Technology 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 Sparx Technology 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 Sparx Technology, you can compare the effects of market volatilities on IShares Canadian and Sparx Technology 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 Sparx Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Sparx Technology.
Diversification Opportunities for IShares Canadian and Sparx Technology
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Sparx is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology 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 Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of IShares Canadian i.e., IShares Canadian and Sparx Technology go up and down completely randomly.
Pair Corralation between IShares Canadian and Sparx Technology
Assuming the 90 days trading horizon IShares Canadian is expected to generate 15.95 times less return on investment than Sparx Technology. But when comparing it to its historical volatility, iShares Canadian HYBrid is 7.59 times less risky than Sparx Technology. It trades about 0.1 of its potential returns per unit of risk. Sparx Technology is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,424 in Sparx Technology on August 29, 2024 and sell it today you would earn a total of 219.00 from holding Sparx Technology or generate 9.03% 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. Sparx Technology
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Sparx Technology |
IShares Canadian and Sparx Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Sparx Technology
The main advantage of trading using opposite IShares Canadian and Sparx Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Sparx Technology 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 Sparx Technology will offset losses from the drop in Sparx Technology'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 |
| Sparx Technology vs. Westbond Enterprises Corp | Sparx Technology vs. Network Media Group | Sparx Technology vs. Thunderbird Entertainment Group | Sparx Technology vs. iShares Canadian HYBrid |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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