Correlation Between IShares Small and Desjardins
Can any of the company-specific risk be diversified away by investing in both IShares Small and Desjardins 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 Small and Desjardins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Small Cap and Desjardins RI Emerging, you can compare the effects of market volatilities on IShares Small and Desjardins 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 Small with a short position of Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Small and Desjardins.
Diversification Opportunities for IShares Small and Desjardins
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and Desjardins is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding iShares Small Cap and Desjardins RI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Emerging and IShares Small 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 Small Cap are associated (or correlated) with Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Emerging has no effect on the direction of IShares Small i.e., IShares Small and Desjardins go up and down completely randomly.
Pair Corralation between IShares Small and Desjardins
Assuming the 90 days trading horizon iShares Small Cap is expected to generate 1.52 times more return on investment than Desjardins. However, IShares Small is 1.52 times more volatile than Desjardins RI Emerging. It trades about 0.11 of its potential returns per unit of risk. Desjardins RI Emerging is currently generating about 0.05 per unit of risk. If you would invest 3,890 in iShares Small Cap on September 13, 2024 and sell it today you would earn a total of 722.00 from holding iShares Small Cap or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Small Cap vs. Desjardins RI Emerging
Performance |
| Timeline |
| iShares Small Cap |
| Desjardins RI Emerging |
IShares Small and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Small and Desjardins
The main advantage of trading using opposite IShares Small and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Small position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' long position.| IShares Small vs. iShares SPTSX Small | IShares Small vs. iShares Canadian Value | IShares Small vs. iShares Canadian Growth | IShares Small vs. iShares SPTSX Completion |
| Desjardins vs. iShares SPTSX Small | Desjardins vs. iShares MSCI World | Desjardins vs. iShares Small Cap | Desjardins vs. iShares MSCI EAFE |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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