Correlation Between IShares SPTSX and Energy Leaders
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX and Energy Leaders 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 Energy Leaders 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 Energy Leaders Plus, you can compare the effects of market volatilities on IShares SPTSX and Energy Leaders 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 Energy Leaders. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Energy Leaders.
Diversification Opportunities for IShares SPTSX and Energy Leaders
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Energy is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and Energy Leaders Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Leaders Plus 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 Energy Leaders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Leaders Plus has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Energy Leaders go up and down completely randomly.
Pair Corralation between IShares SPTSX and Energy Leaders
Assuming the 90 days trading horizon iShares SPTSX Capped is expected to under-perform the Energy Leaders. But the etf apears to be less risky and, when comparing its historical volatility, iShares SPTSX Capped is 1.3 times less risky than Energy Leaders. The etf trades about -0.07 of its potential returns per unit of risk. The Energy Leaders Plus is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 332.00 in Energy Leaders Plus on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Energy Leaders Plus or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SPTSX Capped vs. Energy Leaders Plus
Performance |
| Timeline |
| iShares SPTSX Capped |
| Energy Leaders Plus |
IShares SPTSX and Energy Leaders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and Energy Leaders
The main advantage of trading using opposite IShares SPTSX and Energy Leaders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX position performs unexpectedly, Energy Leaders 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 Energy Leaders will offset losses from the drop in Energy Leaders' long position.| IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares Canadian Select | IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. BMO Equal Weight |
| Energy Leaders vs. iShares SPTSX Capped | Energy Leaders vs. iShares SPTSX Global | Energy Leaders vs. iShares SPTSX 60 | Energy Leaders vs. iShares SPTSX Capped |
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 Stocks Directory module to find actively traded stocks across global markets.
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