Correlation Between IShares Canadian and Vermilion Energy
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Vermilion Energy 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 Vermilion Energy 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 Vermilion Energy, you can compare the effects of market volatilities on IShares Canadian and Vermilion Energy 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 Vermilion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Vermilion Energy.
Diversification Opportunities for IShares Canadian and Vermilion Energy
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and Vermilion is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Vermilion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vermilion Energy 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 Vermilion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vermilion Energy has no effect on the direction of IShares Canadian i.e., IShares Canadian and Vermilion Energy go up and down completely randomly.
Pair Corralation between IShares Canadian and Vermilion Energy
Assuming the 90 days trading horizon IShares Canadian is expected to generate 12.05 times less return on investment than Vermilion Energy. But when comparing it to its historical volatility, iShares Canadian HYBrid is 9.76 times less risky than Vermilion Energy. It trades about 0.1 of its potential returns per unit of risk. Vermilion Energy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,337 in Vermilion Energy on August 28, 2024 and sell it today you would earn a total of 85.00 from holding Vermilion Energy or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. Vermilion Energy
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Vermilion Energy |
IShares Canadian and Vermilion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Vermilion Energy
The main advantage of trading using opposite IShares Canadian and Vermilion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Vermilion Energy 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 Vermilion Energy will offset losses from the drop in Vermilion Energy'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 |
| Vermilion Energy vs. Yangarra Resources | Vermilion Energy vs. iShares Canadian HYBrid | Vermilion Energy vs. Altagas Cum Red | Vermilion Energy vs. European Residential Real |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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