Correlation Between Mackenzie Global and IShares Global

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

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

Diversification Opportunities for Mackenzie Global and IShares Global

0.8

Correlation Coefficient

Mackenzie Global  IShares Global

Very poor diversification

The 3 months correlation between Mackenzie and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Global Sustainable and iShares Global Monthly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Monthly and Mackenzie Global 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 Mackenzie Global Sustainable are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Monthly has no effect on the direction of Mackenzie Global i.e., Mackenzie Global and IShares Global go up and down completely randomly.

Pair Corralation between Mackenzie Global and IShares Global

Assuming the 90 days trading horizon Mackenzie Global Sustainable is expected to generate 1.18 times more return on investment than IShares Global. However, Mackenzie Global is 1.18 times more volatile than iShares Global Monthly. It trades about 0.13 of its potential returns per unit of risk. iShares Global Monthly is currently generating about 0.12 per unit of risk. If you would invest  2,554  in Mackenzie Global Sustainable on September 3, 2024 and sell it today you would earn a total of  146.00  from holding Mackenzie Global Sustainable or generate 5.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	89.06%
Values	Daily Returns

Mackenzie Global Sustainable  vs.  iShares Global Monthly

Mackenzie Global Sus

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Global Sustainable are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Mackenzie Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares Global Monthly

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Monthly are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, IShares Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mackenzie Global and IShares Global

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

The idea behind Mackenzie Global Sustainable and iShares Global Monthly 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.