Correlation Between IShares ESG and Mackenzie Balanced

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

By analyzing existing cross correlation between iShares ESG Growth and Mackenzie Balanced Allocation, you can compare the effects of market volatilities on IShares ESG and Mackenzie Balanced 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 ESG with a short position of Mackenzie Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Mackenzie Balanced.

Diversification Opportunities for IShares ESG and Mackenzie Balanced

0.96

Correlation Coefficient

IShares ESG  Mackenzie Balanced

Almost no diversification

The 3 months correlation between IShares and Mackenzie is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Growth and Mackenzie Balanced Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Balanced and IShares ESG 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 ESG Growth are associated (or correlated) with Mackenzie Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Balanced has no effect on the direction of IShares ESG i.e., IShares ESG and Mackenzie Balanced go up and down completely randomly.

Pair Corralation between IShares ESG and Mackenzie Balanced

Assuming the 90 days trading horizon iShares ESG Growth is expected to generate 1.11 times more return on investment than Mackenzie Balanced. However, IShares ESG is 1.11 times more volatile than Mackenzie Balanced Allocation. It trades about 0.23 of its potential returns per unit of risk. Mackenzie Balanced Allocation is currently generating about 0.18 per unit of risk. If you would invest  5,502  in iShares ESG Growth on September 17, 2024 and sell it today you would earn a total of  404.00  from holding iShares ESG Growth or generate 7.34% return on investment over 90 days.

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

iShares ESG Growth  vs.  Mackenzie Balanced Allocation

iShares ESG Growth

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Growth are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares ESG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mackenzie Balanced

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Balanced Allocation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mackenzie Balanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares ESG and Mackenzie Balanced

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

The idea behind iShares ESG Growth and Mackenzie Balanced Allocation 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.

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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 Valuation module to check real value of public entities based on technical and fundamental data.