Correlation Between IShares Canadian and CI Global

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

Diversification Opportunities for IShares Canadian and CI Global

0.51

Correlation Coefficient

IShares Canadian  CI Global

Very weak diversification

The 3 months correlation between IShares and CGRA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and CI Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Real 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 CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Real has no effect on the direction of IShares Canadian i.e., IShares Canadian and CI Global go up and down completely randomly.

Pair Corralation between IShares Canadian and CI Global

Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 0.53 times more return on investment than CI Global. However, iShares Canadian HYBrid is 1.89 times less risky than CI Global. It trades about 0.16 of its potential returns per unit of risk. CI Global Real is currently generating about 0.03 per unit of risk. If you would invest  1,938  in iShares Canadian HYBrid on September 13, 2024 and sell it today you would earn a total of  55.00  from holding iShares Canadian HYBrid or generate 2.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

iShares Canadian HYBrid  vs.  CI Global Real

iShares Canadian HYBrid

Risk-Adjusted Performance

12 of 100

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.

CI Global Real

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Real are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI Global 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 Canadian and CI Global

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

The idea behind iShares Canadian HYBrid and CI Global Real 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.