Correlation Between Mackenzie International and IShares Dividend

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

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

Diversification Opportunities for Mackenzie International and IShares Dividend

0.04

Correlation Coefficient

Mackenzie International  IShares Dividend

Significant diversification

The 3 months correlation between Mackenzie and IShares is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie International Equity and iShares Dividend Growers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Dividend Growers and Mackenzie International 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 International Equity are associated (or correlated) with IShares Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Dividend Growers has no effect on the direction of Mackenzie International i.e., Mackenzie International and IShares Dividend go up and down completely randomly.

Pair Corralation between Mackenzie International and IShares Dividend

Assuming the 90 days trading horizon Mackenzie International Equity is expected to generate 1.17 times more return on investment than IShares Dividend. However, Mackenzie International is 1.17 times more volatile than iShares Dividend Growers. It trades about -0.13 of its potential returns per unit of risk. iShares Dividend Growers is currently generating about -0.54 per unit of risk. If you would invest  12,111  in Mackenzie International Equity on October 13, 2024 and sell it today you would lose (238.00) from holding Mackenzie International Equity or give up 1.97% of portfolio value over 90 days.

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

Mackenzie International Equity  vs.  iShares Dividend Growers

Mackenzie International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mackenzie International Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Mackenzie International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares Dividend Growers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Dividend Growers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Mackenzie International and IShares Dividend

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

The idea behind Mackenzie International Equity and iShares Dividend Growers 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.