Correlation Between Forum Energy and IShares Canadian

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

By analyzing existing cross correlation between Forum Energy Metals and iShares Canadian HYBrid, you can compare the effects of market volatilities on Forum Energy and IShares 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 Forum Energy with a short position of IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and IShares Canadian.

Diversification Opportunities for Forum Energy and IShares Canadian

0.33

Correlation Coefficient

Forum Energy  IShares Canadian

Weak diversification

The 3 months correlation between Forum and IShares is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Metals and iShares Canadian HYBrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian HYBrid and Forum Energy 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 Forum Energy Metals are associated (or correlated) with IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian HYBrid has no effect on the direction of Forum Energy i.e., Forum Energy and IShares Canadian go up and down completely randomly.

Pair Corralation between Forum Energy and IShares Canadian

Assuming the 90 days horizon Forum Energy Metals is expected to under-perform the IShares Canadian. In addition to that, Forum Energy is 27.64 times more volatile than iShares Canadian HYBrid. It trades about -0.18 of its total potential returns per unit of risk. iShares Canadian HYBrid is currently generating about 0.16 per unit of volatility. If you would invest  1,951  in iShares Canadian HYBrid on August 31, 2024 and sell it today you would earn a total of  19.00  from holding iShares Canadian HYBrid or generate 0.97% return on investment over 90 days.

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

Forum Energy Metals  vs.  iShares Canadian HYBrid

Forum Energy Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Forum Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with Forum Energy and IShares Canadian

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

The idea behind Forum Energy Metals and iShares Canadian HYBrid 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.