Correlation Between IShares Core and Guardian Canadian
Can any of the company-specific risk be diversified away by investing in both IShares Core and Guardian Canadian 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 Core and Guardian Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SPTSX and Guardian Canadian Focused, you can compare the effects of market volatilities on IShares Core and Guardian Canadian 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 Core with a short position of Guardian Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Guardian Canadian.
Diversification Opportunities for IShares Core and Guardian Canadian
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Guardian is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SPTSX and Guardian Canadian Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Canadian Focused and IShares Core 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 Core SPTSX are associated (or correlated) with Guardian Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Canadian Focused has no effect on the direction of IShares Core i.e., IShares Core and Guardian Canadian go up and down completely randomly.
Pair Corralation between IShares Core and Guardian Canadian
Assuming the 90 days trading horizon IShares Core is expected to generate 2.43 times less return on investment than Guardian Canadian. But when comparing it to its historical volatility, iShares Core SPTSX is 2.59 times less risky than Guardian Canadian. It trades about 0.36 of its potential returns per unit of risk. Guardian Canadian Focused is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,810 in Guardian Canadian Focused on September 13, 2024 and sell it today you would earn a total of 221.00 from holding Guardian Canadian Focused or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SPTSX vs. Guardian Canadian Focused
Performance |
| Timeline |
| iShares Core SPTSX |
| Guardian Canadian Focused |
IShares Core and Guardian Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Guardian Canadian
The main advantage of trading using opposite IShares Core and Guardian Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Guardian Canadian 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 Guardian Canadian will offset losses from the drop in Guardian Canadian's long position.| IShares Core vs. iShares SPTSX 60 | IShares Core vs. iShares Core SP | IShares Core vs. iShares SPTSX Composite | IShares Core vs. iShares Core MSCI |
| Guardian Canadian vs. Guardian Directed Equity | Guardian Canadian vs. Guardian Canadian Sector | Guardian Canadian vs. Guardian Ultra Short Canadian | Guardian Canadian vs. Guardian i3 Global |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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