Correlation Between Mackenzie Balanced and IShares ESG

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

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

Diversification Opportunities for Mackenzie Balanced and IShares ESG

0.95

Correlation Coefficient

Mackenzie Balanced  IShares ESG

Almost no diversification

The 3 months correlation between Mackenzie and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Balanced Allocation and iShares ESG Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Conservative and Mackenzie Balanced 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 Mackenzie Balanced Allocation are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Conservative has no effect on the direction of Mackenzie Balanced i.e., Mackenzie Balanced and IShares ESG go up and down completely randomly.

Pair Corralation between Mackenzie Balanced and IShares ESG

Assuming the 90 days trading horizon Mackenzie Balanced Allocation is expected to generate 0.86 times more return on investment than IShares ESG. However, Mackenzie Balanced Allocation is 1.17 times less risky than IShares ESG. It trades about 0.18 of its potential returns per unit of risk. iShares ESG Conservative is currently generating about 0.11 per unit of risk. If you would invest  2,461  in Mackenzie Balanced Allocation on September 17, 2024 and sell it today you would earn a total of  125.00  from holding Mackenzie Balanced Allocation or generate 5.08% return on investment over 90 days.

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

Mackenzie Balanced Allocation  vs.  iShares ESG Conservative

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.

iShares ESG Conservative

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Conservative are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares ESG is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mackenzie Balanced and IShares ESG

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

The idea behind Mackenzie Balanced Allocation and iShares ESG Conservative 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 Stocks Directory module to find actively traded stocks across global markets.