Correlation Between IShares Fundamental and Canso Select

Can any of the company-specific risk be diversified away by investing in both IShares Fundamental and Canso Select 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 Fundamental and Canso Select into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Fundamental Hedged and Canso Select Opportunities, you can compare the effects of market volatilities on IShares Fundamental and Canso Select 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 Fundamental with a short position of Canso Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Fundamental and Canso Select.

Diversification Opportunities for IShares Fundamental and Canso Select

0.33

Correlation Coefficient

IShares Fundamental  Canso Select

Weak diversification

The 3 months correlation between IShares and Canso is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Canso Select Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canso Select Opportu and IShares Fundamental 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 Fundamental Hedged are associated (or correlated) with Canso Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canso Select Opportu has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and Canso Select go up and down completely randomly.

Pair Corralation between IShares Fundamental and Canso Select

Assuming the 90 days trading horizon IShares Fundamental is expected to generate 2.75 times less return on investment than Canso Select. But when comparing it to its historical volatility, iShares Fundamental Hedged is 6.59 times less risky than Canso Select. It trades about 0.16 of its potential returns per unit of risk. Canso Select Opportunities is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  221.00  in Canso Select Opportunities on September 12, 2024 and sell it today you would earn a total of  29.00  from holding Canso Select Opportunities or generate 13.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

iShares Fundamental Hedged  vs.  Canso Select Opportunities

iShares Fundamental

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Fundamental Hedged are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares Fundamental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Canso Select Opportu

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Select Opportunities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Canso Select sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Fundamental and Canso Select

The main advantage of trading using opposite IShares Fundamental and Canso Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Fundamental position performs unexpectedly, Canso Select 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 Canso Select will offset losses from the drop in Canso Select's long position.

The idea behind iShares Fundamental Hedged and Canso Select Opportunities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..