Correlation Between IShares Canadian and Slate Grocery

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

Diversification Opportunities for IShares Canadian and Slate Grocery

0.46

Correlation Coefficient

IShares Canadian  Slate Grocery

Very weak diversification

The 3 months correlation between IShares and Slate is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Slate Grocery REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Grocery REIT 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 Slate Grocery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Grocery REIT has no effect on the direction of IShares Canadian i.e., IShares Canadian and Slate Grocery go up and down completely randomly.

Pair Corralation between IShares Canadian and Slate Grocery

Assuming the 90 days trading horizon IShares Canadian is expected to generate 2.63 times less return on investment than Slate Grocery. But when comparing it to its historical volatility, iShares Canadian HYBrid is 4.87 times less risky than Slate Grocery. It trades about 0.14 of its potential returns per unit of risk. Slate Grocery REIT is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  783.00  in Slate Grocery REIT on September 13, 2024 and sell it today you would earn a total of  242.00  from holding Slate Grocery REIT or generate 30.91% return on investment over 90 days.

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

iShares Canadian HYBrid  vs.  Slate Grocery REIT

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.

Slate Grocery REIT

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Slate Grocery REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Slate Grocery is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Canadian and Slate Grocery

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

The idea behind iShares Canadian HYBrid and Slate Grocery REIT 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.