Correlation Between PowerBand Solutions and IShares Canadian

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

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

Diversification Opportunities for PowerBand Solutions and IShares Canadian

0.43

Correlation Coefficient

PowerBand Solutions  IShares Canadian

Very weak diversification

The 3 months correlation between PowerBand and IShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding PowerBand Solutions 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 PowerBand Solutions 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 PowerBand Solutions 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 PowerBand Solutions i.e., PowerBand Solutions and IShares Canadian go up and down completely randomly.

Pair Corralation between PowerBand Solutions and IShares Canadian

Assuming the 90 days horizon PowerBand Solutions is expected to generate 27.66 times more return on investment than IShares Canadian. However, PowerBand Solutions is 27.66 times more volatile than iShares Canadian HYBrid. It trades about 0.21 of its potential returns per unit of risk. iShares Canadian HYBrid is currently generating about 0.19 per unit of risk. If you would invest  5.50  in PowerBand Solutions on September 3, 2024 and sell it today you would earn a total of  7.50  from holding PowerBand Solutions or generate 136.36% return on investment over 90 days.

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

PowerBand Solutions  vs.  iShares Canadian HYBrid

PowerBand Solutions

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PowerBand Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, PowerBand Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

iShares Canadian HYBrid

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 15 (%) 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 PowerBand Solutions and IShares Canadian

The main advantage of trading using opposite PowerBand Solutions and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PowerBand Solutions 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 PowerBand Solutions 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.