Correlation Between Mackenzie Canadian and First Asset

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

By analyzing existing cross correlation between Mackenzie Canadian Equity and First Asset Morningstar, you can compare the effects of market volatilities on Mackenzie Canadian and First Asset 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 First Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Canadian and First Asset.

Diversification Opportunities for Mackenzie Canadian and First Asset

0.97

Correlation Coefficient

Mackenzie Canadian  First Asset

Almost no diversification

The 3 months correlation between Mackenzie and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Canadian Equity and First Asset Morningstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Morningstar 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 Equity are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Morningstar has no effect on the direction of Mackenzie Canadian i.e., Mackenzie Canadian and First Asset go up and down completely randomly.

Pair Corralation between Mackenzie Canadian and First Asset

Assuming the 90 days trading horizon Mackenzie Canadian is expected to generate 1.54 times less return on investment than First Asset. But when comparing it to its historical volatility, Mackenzie Canadian Equity is 1.45 times less risky than First Asset. It trades about 0.32 of its potential returns per unit of risk. First Asset Morningstar is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  2,912  in First Asset Morningstar on September 13, 2024 and sell it today you would earn a total of  434.00  from holding First Asset Morningstar or generate 14.9% return on investment over 90 days.

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

Mackenzie Canadian Equity  vs.  First Asset Morningstar

Mackenzie Canadian Equity

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Canadian Equity are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Mackenzie Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

First Asset Morningstar

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Morningstar are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, First Asset displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mackenzie Canadian and First Asset

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

The idea behind Mackenzie Canadian Equity and First Asset Morningstar 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.