Correlation Between Purpose Total and Mackenzie High

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

By analyzing existing cross correlation between Purpose Total Return and Mackenzie High Yield, you can compare the effects of market volatilities on Purpose Total and Mackenzie High 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 Purpose Total with a short position of Mackenzie High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purpose Total and Mackenzie High.

Diversification Opportunities for Purpose Total and Mackenzie High

0.45

Correlation Coefficient

Purpose Total  Mackenzie High

Very weak diversification

The 3 months correlation between Purpose and Mackenzie is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Total Return and Mackenzie High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie High Yield and Purpose Total 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 Purpose Total Return are associated (or correlated) with Mackenzie High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie High Yield has no effect on the direction of Purpose Total i.e., Purpose Total and Mackenzie High go up and down completely randomly.

Pair Corralation between Purpose Total and Mackenzie High

Assuming the 90 days trading horizon Purpose Total is expected to generate 2.48 times less return on investment than Mackenzie High. But when comparing it to its historical volatility, Purpose Total Return is 1.66 times less risky than Mackenzie High. It trades about 0.06 of its potential returns per unit of risk. Mackenzie High Yield is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8,115  in Mackenzie High Yield on September 12, 2024 and sell it today you would earn a total of  183.00  from holding Mackenzie High Yield or generate 2.26% return on investment over 90 days.

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

Purpose Total Return  vs.  Mackenzie High Yield

Purpose Total Return

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Total Return are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Purpose Total is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mackenzie High Yield

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie High Yield are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mackenzie High is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Purpose Total and Mackenzie High

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

The idea behind Purpose Total Return and Mackenzie High Yield 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.