Correlation Between Mackenzie Developed and Forstrong Global

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

By analyzing existing cross correlation between Mackenzie Developed ex North and Forstrong Global Income, you can compare the effects of market volatilities on Mackenzie Developed and Forstrong Global 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 Developed with a short position of Forstrong Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Developed and Forstrong Global.

Diversification Opportunities for Mackenzie Developed and Forstrong Global

0.52

Correlation Coefficient

Mackenzie Developed  Forstrong Global

Very weak diversification

The 3 months correlation between Mackenzie and Forstrong is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Developed ex North and Forstrong Global Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forstrong Global Income and Mackenzie Developed 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 Developed ex North are associated (or correlated) with Forstrong Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forstrong Global Income has no effect on the direction of Mackenzie Developed i.e., Mackenzie Developed and Forstrong Global go up and down completely randomly.

Pair Corralation between Mackenzie Developed and Forstrong Global

Assuming the 90 days trading horizon Mackenzie Developed ex North is expected to under-perform the Forstrong Global. But the etf apears to be less risky and, when comparing its historical volatility, Mackenzie Developed ex North is 1.05 times less risky than Forstrong Global. The etf trades about -0.08 of its potential returns per unit of risk. The Forstrong Global Income is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,180  in Forstrong Global Income on October 22, 2024 and sell it today you would lose (7.00) from holding Forstrong Global Income or give up 0.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Mackenzie Developed ex North  vs.  Forstrong Global Income

Mackenzie Developed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Forstrong Global Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mackenzie Developed and Forstrong Global

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

The idea behind Mackenzie Developed ex North and Forstrong Global Income 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 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.