Correlation Between IShares Floating and CI Short

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

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

Diversification Opportunities for IShares Floating and CI Short

-0.38

Correlation Coefficient

IShares Floating  CI Short

Very good diversification

The 3 months correlation between IShares and FGB is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding iShares Floating Rate and CI Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Short Term and IShares Floating 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 Floating Rate are associated (or correlated) with CI Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Short Term has no effect on the direction of IShares Floating i.e., IShares Floating and CI Short go up and down completely randomly.

Pair Corralation between IShares Floating and CI Short

Assuming the 90 days trading horizon iShares Floating Rate is expected to generate 0.23 times more return on investment than CI Short. However, iShares Floating Rate is 4.42 times less risky than CI Short. It trades about 0.38 of its potential returns per unit of risk. CI Short Term is currently generating about 0.0 per unit of risk. If you would invest  1,988  in iShares Floating Rate on September 16, 2024 and sell it today you would earn a total of  18.00  from holding iShares Floating Rate or generate 0.91% return on investment over 90 days.

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

iShares Floating Rate  vs.  CI Short Term

iShares Floating Rate

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Floating Rate are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Floating is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI Short Term has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, CI Short 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 Floating and CI Short

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

The idea behind iShares Floating Rate and CI Short Term 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.