Correlation Between IShares Canadian and Tangerine Balanced

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

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

Diversification Opportunities for IShares Canadian and Tangerine Balanced

0.79

Correlation Coefficient

IShares Canadian  Tangerine Balanced

Poor diversification

The 3 months correlation between IShares and Tangerine is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Tangerine Balanced Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tangerine Balanced Growth and IShares Canadian 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 Canadian HYBrid are associated (or correlated) with Tangerine Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tangerine Balanced Growth has no effect on the direction of IShares Canadian i.e., IShares Canadian and Tangerine Balanced go up and down completely randomly.

Pair Corralation between IShares Canadian and Tangerine Balanced

Assuming the 90 days trading horizon IShares Canadian is expected to generate 2.1 times less return on investment than Tangerine Balanced. In addition to that, IShares Canadian is 1.07 times more volatile than Tangerine Balanced Growth. It trades about 0.24 of its total potential returns per unit of risk. Tangerine Balanced Growth is currently generating about 0.55 per unit of volatility. If you would invest  2,204  in Tangerine Balanced Growth on September 4, 2024 and sell it today you would earn a total of  89.00  from holding Tangerine Balanced Growth or generate 4.04% return on investment over 90 days.

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

iShares Canadian HYBrid  vs.  Tangerine Balanced Growth

iShares Canadian HYBrid

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Tangerine Balanced Growth

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tangerine Balanced Growth are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Tangerine Balanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Canadian and Tangerine Balanced

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

The idea behind iShares Canadian HYBrid and Tangerine Balanced Growth 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.