Correlation Between IShares Core and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares 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 IShares 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 iShares Canadian Select, you can compare the effects of market volatilities on IShares Core and IShares 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 IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares Canadian.
Diversification Opportunities for IShares Core and IShares Canadian
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SPTSX and iShares Canadian Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian Select 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 IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian Select has no effect on the direction of IShares Core i.e., IShares Core and IShares Canadian go up and down completely randomly.
Pair Corralation between IShares Core and IShares Canadian
Assuming the 90 days trading horizon iShares Core SPTSX is expected to generate 1.16 times more return on investment than IShares Canadian. However, IShares Core is 1.16 times more volatile than iShares Canadian Select. It trades about 0.16 of its potential returns per unit of risk. iShares Canadian Select is currently generating about 0.19 per unit of risk. If you would invest 3,163 in iShares Core SPTSX on August 31, 2024 and sell it today you would earn a total of 919.00 from holding iShares Core SPTSX or generate 29.05% 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. iShares Canadian Select
Performance |
| Timeline |
| iShares Core SPTSX |
| iShares Canadian Select |
IShares Core and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares Canadian
The main advantage of trading using opposite IShares Core and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares 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 IShares Canadian will offset losses from the drop in IShares 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 |
| IShares Canadian vs. iShares SPTSX Composite | IShares Canadian vs. Vanguard FTSE Canadian | IShares Canadian vs. Vanguard SP 500 | IShares Canadian vs. iShares Core SPTSX |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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