Correlation Between IShares Core and Dynamic Active
Can any of the company-specific risk be diversified away by investing in both IShares Core and Dynamic Active 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 Core and Dynamic Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and Dynamic Active Dividend, you can compare the effects of market volatilities on IShares Core and Dynamic Active 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 Core with a short position of Dynamic Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Dynamic Active.
Diversification Opportunities for IShares Core and Dynamic Active
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Dynamic is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Dynamic Active Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Dividend and IShares Core 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 Core SP are associated (or correlated) with Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Dividend has no effect on the direction of IShares Core i.e., IShares Core and Dynamic Active go up and down completely randomly.
Pair Corralation between IShares Core and Dynamic Active
Assuming the 90 days trading horizon IShares Core is expected to generate 2.11 times less return on investment than Dynamic Active. But when comparing it to its historical volatility, iShares Core SP is 1.44 times less risky than Dynamic Active. It trades about 0.15 of its potential returns per unit of risk. Dynamic Active Dividend is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,149 in Dynamic Active Dividend on August 28, 2024 and sell it today you would earn a total of 366.00 from holding Dynamic Active Dividend or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. Dynamic Active Dividend
Performance |
| Timeline |
| iShares Core SP |
| Dynamic Active Dividend |
IShares Core and Dynamic Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Dynamic Active
The main advantage of trading using opposite IShares Core and Dynamic Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Dynamic Active 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 Dynamic Active will offset losses from the drop in Dynamic Active's long position.| IShares Core vs. iShares SPTSX 60 | IShares Core vs. iShares MSCI EAFE | IShares Core vs. iShares Core SPTSX | IShares Core vs. iShares SPTSX Capped |
| Dynamic Active vs. Dynamic Active Global | Dynamic Active vs. Dynamic Active Canadian | Dynamic Active vs. Dynamic Active Preferred | Dynamic Active vs. Dynamic Active Global |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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