Correlation Between Mackenzie Core and Mackenzie TIPS

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

By analyzing existing cross correlation between Mackenzie Core Plus and Mackenzie TIPS Index, you can compare the effects of market volatilities on Mackenzie Core and Mackenzie TIPS 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 Core with a short position of Mackenzie TIPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Core and Mackenzie TIPS.

Diversification Opportunities for Mackenzie Core and Mackenzie TIPS

0.85

Correlation Coefficient

Mackenzie Core  Mackenzie TIPS

Very poor diversification

The 3 months correlation between Mackenzie and Mackenzie is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Core Plus and Mackenzie TIPS Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie TIPS Index and Mackenzie Core 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 Core Plus are associated (or correlated) with Mackenzie TIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie TIPS Index has no effect on the direction of Mackenzie Core i.e., Mackenzie Core and Mackenzie TIPS go up and down completely randomly.

Pair Corralation between Mackenzie Core and Mackenzie TIPS

Assuming the 90 days trading horizon Mackenzie Core Plus is expected to generate 1.27 times more return on investment than Mackenzie TIPS. However, Mackenzie Core is 1.27 times more volatile than Mackenzie TIPS Index. It trades about 0.05 of its potential returns per unit of risk. Mackenzie TIPS Index is currently generating about 0.0 per unit of risk. If you would invest  1,640  in Mackenzie Core Plus on September 1, 2024 and sell it today you would earn a total of  17.00  from holding Mackenzie Core Plus or generate 1.04% return on investment over 90 days.

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

Mackenzie Core Plus  vs.  Mackenzie TIPS Index

Mackenzie Core Plus

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Core Plus are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Mackenzie Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mackenzie TIPS Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mackenzie TIPS Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mackenzie TIPS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mackenzie Core and Mackenzie TIPS

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

The idea behind Mackenzie Core Plus and Mackenzie TIPS Index 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.