Correlation Between IShares Canadian and US Bancorp
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and US Bancorp 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 Canadian and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian Short and US Bancorp, you can compare the effects of market volatilities on IShares Canadian and US Bancorp 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 Canadian with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and US Bancorp.
Diversification Opportunities for IShares Canadian and US Bancorp
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and USB is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Short and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and IShares Canadian 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 Canadian Short are associated (or correlated) with US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of IShares Canadian i.e., IShares Canadian and US Bancorp go up and down completely randomly.
Pair Corralation between IShares Canadian and US Bancorp
Assuming the 90 days trading horizon IShares Canadian is expected to generate 2.72 times less return on investment than US Bancorp. But when comparing it to its historical volatility, iShares Canadian Short is 1.46 times less risky than US Bancorp. It trades about 0.09 of its potential returns per unit of risk. US Bancorp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 68,203 in US Bancorp on September 2, 2024 and sell it today you would earn a total of 33,347 from holding US Bancorp or generate 48.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares Canadian Short vs. US Bancorp
Performance |
| Timeline |
| iShares Canadian Short |
| US Bancorp |
IShares Canadian and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and US Bancorp
The main advantage of trading using opposite IShares Canadian and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| IShares Canadian vs. iShares Trust | IShares Canadian vs. iShares Trust | IShares Canadian vs. iShares Trust | IShares Canadian vs. iShares Trust |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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