Correlation Between IShares Canadian and Mackenzie Canadian

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

By analyzing existing cross correlation between iShares Canadian Real and Mackenzie Canadian Short Term, you can compare the effects of market volatilities on IShares Canadian and Mackenzie Canadian 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 Mackenzie Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Mackenzie Canadian.

Diversification Opportunities for IShares Canadian and Mackenzie Canadian

0.82

Correlation Coefficient

IShares Canadian  Mackenzie Canadian

Very poor diversification

The 3 months correlation between IShares and Mackenzie is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Real and Mackenzie Canadian Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Canadian 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 Real are associated (or correlated) with Mackenzie Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Canadian has no effect on the direction of IShares Canadian i.e., IShares Canadian and Mackenzie Canadian go up and down completely randomly.

Pair Corralation between IShares Canadian and Mackenzie Canadian

Assuming the 90 days trading horizon IShares Canadian is expected to generate 6.12 times less return on investment than Mackenzie Canadian. In addition to that, IShares Canadian is 3.51 times more volatile than Mackenzie Canadian Short Term. It trades about 0.0 of its total potential returns per unit of risk. Mackenzie Canadian Short Term is currently generating about 0.06 per unit of volatility. If you would invest  9,850  in Mackenzie Canadian Short Term on September 16, 2024 and sell it today you would earn a total of  66.00  from holding Mackenzie Canadian Short Term or generate 0.67% return on investment over 90 days.

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

iShares Canadian Real  vs.  Mackenzie Canadian Short Term

iShares Canadian Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Canadian Real has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Mackenzie Canadian

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Canadian Short Term are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Mackenzie Canadian 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 Mackenzie Canadian

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

The idea behind iShares Canadian Real and Mackenzie Canadian Short Term 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..