Correlation Between IShares IG and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both IShares IG 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 IG 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 IG Corporate and iShares Canadian HYBrid, you can compare the effects of market volatilities on IShares IG 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 IG with a short position of IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IG and IShares Canadian.
Diversification Opportunities for IShares IG and IShares Canadian
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and IShares is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding iShares IG Corporate and iShares Canadian HYBrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian HYBrid and IShares IG 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 IG Corporate 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 HYBrid has no effect on the direction of IShares IG i.e., IShares IG and IShares Canadian go up and down completely randomly.
Pair Corralation between IShares IG and IShares Canadian
Assuming the 90 days trading horizon IShares IG is expected to generate 1.51 times less return on investment than IShares Canadian. In addition to that, IShares IG is 1.98 times more volatile than iShares Canadian HYBrid. It trades about 0.03 of its total potential returns per unit of risk. iShares Canadian HYBrid is currently generating about 0.1 per unit of volatility. If you would invest 1,953 in iShares Canadian HYBrid on August 29, 2024 and sell it today you would earn a total of 11.00 from holding iShares Canadian HYBrid or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares IG Corporate vs. iShares Canadian HYBrid
Performance |
| Timeline |
| iShares IG Corporate |
| iShares Canadian HYBrid |
IShares IG and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IG and IShares Canadian
The main advantage of trading using opposite IShares IG and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IG 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 IG vs. Mackenzie High Yield | IShares IG vs. Mackenzie Core Plus | IShares IG vs. Mackenzie Canadian Aggregate | IShares IG vs. Mackenzie Core Plus |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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