Correlation Between IShares Canadian and CI 1
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and CI 1 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 CI 1 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 CI 1 5 Year, you can compare the effects of market volatilities on IShares Canadian and CI 1 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 CI 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and CI 1.
Diversification Opportunities for IShares Canadian and CI 1
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and BXF is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Short and CI 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI 1 5 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 CI 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI 1 5 has no effect on the direction of IShares Canadian i.e., IShares Canadian and CI 1 go up and down completely randomly.
Pair Corralation between IShares Canadian and CI 1
Assuming the 90 days trading horizon IShares Canadian is expected to generate 4.39 times less return on investment than CI 1. But when comparing it to its historical volatility, iShares Canadian Short is 1.66 times less risky than CI 1. It trades about 0.05 of its potential returns per unit of risk. CI 1 5 Year is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,010 in CI 1 5 Year on August 31, 2024 and sell it today you would earn a total of 7.00 from holding CI 1 5 Year or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Canadian Short vs. CI 1 5 Year
Performance |
| Timeline |
| iShares Canadian Short |
| CI 1 5 |
IShares Canadian and CI 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and CI 1
The main advantage of trading using opposite IShares Canadian and CI 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, CI 1 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 CI 1 will offset losses from the drop in CI 1's long position.| IShares Canadian vs. iShares Canadian Universe | IShares Canadian vs. iShares Canadian Real | IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Core Canadian |
| CI 1 vs. BMO Discount Bond | CI 1 vs. Vanguard Canadian Short | CI 1 vs. Global X Canadian | CI 1 vs. BMO Short Federal |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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