Correlation Between IShares Canadian and Mountain Boy

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

Diversification Opportunities for IShares Canadian and Mountain Boy

-0.11

Correlation Coefficient

IShares Canadian  Mountain Boy

Good diversification

The 3 months correlation between IShares and Mountain is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Mountain Boy Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Boy Minerals 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 Mountain Boy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Boy Minerals has no effect on the direction of IShares Canadian i.e., IShares Canadian and Mountain Boy go up and down completely randomly.

Pair Corralation between IShares Canadian and Mountain Boy

Assuming the 90 days trading horizon IShares Canadian is expected to generate 10.82 times less return on investment than Mountain Boy. But when comparing it to its historical volatility, iShares Canadian HYBrid is 50.23 times less risky than Mountain Boy. It trades about 0.15 of its potential returns per unit of risk. Mountain Boy Minerals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Mountain Boy Minerals on September 5, 2024 and sell it today you would lose (0.50) from holding Mountain Boy Minerals or give up 25.0% of portfolio value over 90 days.

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

iShares Canadian HYBrid  vs.  Mountain Boy Minerals

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.

Mountain Boy Minerals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mountain Boy Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Mountain Boy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Canadian and Mountain Boy

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

The idea behind iShares Canadian HYBrid and Mountain Boy Minerals 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.