Correlation Between IShares SPTSX and Fidelity Canadian
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX and Fidelity 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 SPTSX and Fidelity Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SPTSX Capped and Fidelity Canadian Value, you can compare the effects of market volatilities on IShares SPTSX and Fidelity 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 SPTSX with a short position of Fidelity Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Fidelity Canadian.
Diversification Opportunities for IShares SPTSX and Fidelity Canadian
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Fidelity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and Fidelity Canadian Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canadian Value and IShares SPTSX 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 SPTSX Capped are associated (or correlated) with Fidelity Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canadian Value has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Fidelity Canadian go up and down completely randomly.
Pair Corralation between IShares SPTSX and Fidelity Canadian
Assuming the 90 days trading horizon iShares SPTSX Capped is expected to generate 3.25 times more return on investment than Fidelity Canadian. However, IShares SPTSX is 3.25 times more volatile than Fidelity Canadian Value. It trades about 0.35 of its potential returns per unit of risk. Fidelity Canadian Value is currently generating about 0.13 per unit of risk. If you would invest 5,976 in iShares SPTSX Capped on August 29, 2024 and sell it today you would earn a total of 944.00 from holding iShares SPTSX Capped or generate 15.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SPTSX Capped vs. Fidelity Canadian Value
Performance |
| Timeline |
| iShares SPTSX Capped |
| Fidelity Canadian Value |
IShares SPTSX and Fidelity Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and Fidelity Canadian
The main advantage of trading using opposite IShares SPTSX and Fidelity Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX position performs unexpectedly, Fidelity 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 Fidelity Canadian will offset losses from the drop in Fidelity Canadian's long position.| IShares SPTSX vs. BMO Covered Call | IShares SPTSX vs. BMO Canadian High | IShares SPTSX vs. BMO Europe High | IShares SPTSX vs. Harvest Healthcare Leaders |
| Fidelity Canadian vs. iShares SPTSX 60 | Fidelity Canadian vs. iShares Core SPTSX | Fidelity Canadian vs. BMO SPTSX Capped | Fidelity Canadian vs. Vanguard FTSE Canada |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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