Correlation Between IShares Canadian and AnalytixInsight

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Can any of the company-specific risk be diversified away by investing in both IShares Canadian and AnalytixInsight 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 AnalytixInsight 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 AnalytixInsight, you can compare the effects of market volatilities on IShares Canadian and AnalytixInsight 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 AnalytixInsight. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and AnalytixInsight.

Diversification Opportunities for IShares Canadian and AnalytixInsight

-0.38
  Correlation Coefficient

Very good diversification

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

Pair Corralation between IShares Canadian and AnalytixInsight

Assuming the 90 days trading horizon IShares Canadian is expected to generate 2.36 times less return on investment than AnalytixInsight. But when comparing it to its historical volatility, iShares Canadian HYBrid is 68.46 times less risky than AnalytixInsight. It trades about 0.16 of its potential returns per unit of risk. AnalytixInsight is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.50  in AnalytixInsight on September 5, 2024 and sell it today you would lose (1.50) from holding AnalytixInsight or give up 60.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

iShares Canadian HYBrid  vs.  AnalytixInsight

 Performance 
       Timeline  
iShares Canadian HYBrid 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 12 (%) 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.
AnalytixInsight 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AnalytixInsight has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, AnalytixInsight may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IShares Canadian and AnalytixInsight Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares Canadian and AnalytixInsight

The main advantage of trading using opposite IShares Canadian and AnalytixInsight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, AnalytixInsight 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 AnalytixInsight will offset losses from the drop in AnalytixInsight's long position.
The idea behind iShares Canadian HYBrid and AnalytixInsight 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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