Correlation Between CI WisdomTree and IShares Core

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

By analyzing existing cross correlation between CI WisdomTree Canada and iShares Core MSCI, you can compare the effects of market volatilities on CI WisdomTree and IShares Core 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 CI WisdomTree with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI WisdomTree and IShares Core.

Diversification Opportunities for CI WisdomTree and IShares Core

0.43

Correlation Coefficient

CI WisdomTree  IShares Core

Very weak diversification

The 3 months correlation between DGRC and IShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CI WisdomTree Canada and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI and CI WisdomTree 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 CI WisdomTree Canada are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core MSCI has no effect on the direction of CI WisdomTree i.e., CI WisdomTree and IShares Core go up and down completely randomly.

Pair Corralation between CI WisdomTree and IShares Core

Assuming the 90 days trading horizon CI WisdomTree Canada is expected to under-perform the IShares Core. In addition to that, CI WisdomTree is 1.27 times more volatile than iShares Core MSCI. It trades about -0.02 of its total potential returns per unit of risk. iShares Core MSCI is currently generating about 0.25 per unit of volatility. If you would invest  3,180  in iShares Core MSCI on September 16, 2024 and sell it today you would earn a total of  78.00  from holding iShares Core MSCI or generate 2.45% return on investment over 90 days.

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

CI WisdomTree Canada  vs.  iShares Core MSCI

CI WisdomTree Canada

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI WisdomTree Canada are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI WisdomTree is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares Core MSCI

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CI WisdomTree and IShares Core

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

The idea behind CI WisdomTree Canada and iShares Core MSCI 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.