Correlation Between Vanguard FTSE and IShares Jantzi

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

By analyzing existing cross correlation between Vanguard FTSE Canada and iShares Jantzi Social, you can compare the effects of market volatilities on Vanguard FTSE and IShares Jantzi 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 Vanguard FTSE with a short position of IShares Jantzi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and IShares Jantzi.

Diversification Opportunities for Vanguard FTSE and IShares Jantzi

0.99

Correlation Coefficient

Vanguard FTSE  IShares Jantzi

No risk reduction

The 3 months correlation between Vanguard and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Canada and iShares Jantzi Social in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Jantzi Social and Vanguard FTSE 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 Vanguard FTSE Canada are associated (or correlated) with IShares Jantzi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Jantzi Social has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and IShares Jantzi go up and down completely randomly.

Pair Corralation between Vanguard FTSE and IShares Jantzi

Assuming the 90 days trading horizon Vanguard FTSE Canada is expected to generate 0.78 times more return on investment than IShares Jantzi. However, Vanguard FTSE Canada is 1.28 times less risky than IShares Jantzi. It trades about 0.37 of its potential returns per unit of risk. iShares Jantzi Social is currently generating about 0.28 per unit of risk. If you would invest  4,679  in Vanguard FTSE Canada on August 31, 2024 and sell it today you would earn a total of  564.00  from holding Vanguard FTSE Canada or generate 12.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Vanguard FTSE Canada  vs.  iShares Jantzi Social

Vanguard FTSE Canada

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Canada are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vanguard FTSE may actually be approaching a critical reversion point that can send shares even higher in December 2024.

iShares Jantzi Social

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Jantzi Social are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares Jantzi may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Vanguard FTSE and IShares Jantzi

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

The idea behind Vanguard FTSE Canada and iShares Jantzi Social 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.