Correlation Between IShares SPTSX and CI First

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

By analyzing existing cross correlation between iShares SPTSX Capped and CI First Asset, you can compare the effects of market volatilities on IShares SPTSX and CI First 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 SPTSX with a short position of CI First. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and CI First.

Diversification Opportunities for IShares SPTSX and CI First

-0.18

Correlation Coefficient

IShares SPTSX  CI First

Good diversification

The 3 months correlation between IShares and MXF is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and CI First Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI First Asset and IShares SPTSX 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 SPTSX Capped are associated (or correlated) with CI First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI First Asset has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and CI First go up and down completely randomly.

Pair Corralation between IShares SPTSX and CI First

Assuming the 90 days trading horizon IShares SPTSX is expected to generate 2.95 times less return on investment than CI First. But when comparing it to its historical volatility, iShares SPTSX Capped is 3.81 times less risky than CI First. It trades about 0.29 of its potential returns per unit of risk. CI First Asset is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,045  in CI First Asset on September 14, 2024 and sell it today you would earn a total of  71.00  from holding CI First Asset or generate 6.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

iShares SPTSX Capped  vs.  CI First Asset

iShares SPTSX Capped

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX Capped are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares SPTSX may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CI First Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI First Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, CI First 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 SPTSX and CI First

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

The idea behind iShares SPTSX Capped and CI First Asset 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..