Correlation Between Mackenzie Canadian and Purpose Premium

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

By analyzing existing cross correlation between Mackenzie Canadian Large and Purpose Premium Yield, you can compare the effects of market volatilities on Mackenzie Canadian and Purpose Premium 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 Canadian with a short position of Purpose Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Canadian and Purpose Premium.

Diversification Opportunities for Mackenzie Canadian and Purpose Premium

0.09

Correlation Coefficient

Mackenzie Canadian  Purpose Premium

Significant diversification

The 3 months correlation between Mackenzie and Purpose is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Canadian Large and Purpose Premium Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Premium Yield and Mackenzie Canadian 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 Canadian Large are associated (or correlated) with Purpose Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Premium Yield has no effect on the direction of Mackenzie Canadian i.e., Mackenzie Canadian and Purpose Premium go up and down completely randomly.

Pair Corralation between Mackenzie Canadian and Purpose Premium

Assuming the 90 days trading horizon Mackenzie Canadian Large is expected to generate 1.45 times more return on investment than Purpose Premium. However, Mackenzie Canadian is 1.45 times more volatile than Purpose Premium Yield. It trades about 0.13 of its potential returns per unit of risk. Purpose Premium Yield is currently generating about -0.05 per unit of risk. If you would invest  14,660  in Mackenzie Canadian Large on October 24, 2024 and sell it today you would earn a total of  711.00  from holding Mackenzie Canadian Large or generate 4.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Mackenzie Canadian Large  vs.  Purpose Premium Yield

Mackenzie Canadian Large

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Canadian Large are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Mackenzie Canadian is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Purpose Premium Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Purpose Premium Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Purpose Premium is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mackenzie Canadian and Purpose Premium

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

The idea behind Mackenzie Canadian Large and Purpose Premium Yield 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.