Correlation Between Mackenzie TIPS and Mackenzie Core

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

By analyzing existing cross correlation between Mackenzie TIPS Index and Mackenzie Core Plus, you can compare the effects of market volatilities on Mackenzie TIPS and Mackenzie Core 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 TIPS with a short position of Mackenzie Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie TIPS and Mackenzie Core.

Diversification Opportunities for Mackenzie TIPS and Mackenzie Core

0.85

Correlation Coefficient

Mackenzie TIPS  Mackenzie Core

Very poor diversification

The 3 months correlation between Mackenzie and Mackenzie is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie TIPS Index and Mackenzie Core Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Core Plus and Mackenzie TIPS 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 TIPS Index are associated (or correlated) with Mackenzie Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Core Plus has no effect on the direction of Mackenzie TIPS i.e., Mackenzie TIPS and Mackenzie Core go up and down completely randomly.

Pair Corralation between Mackenzie TIPS and Mackenzie Core

Assuming the 90 days trading horizon Mackenzie TIPS Index is expected to under-perform the Mackenzie Core. But the etf apears to be less risky and, when comparing its historical volatility, Mackenzie TIPS Index is 1.27 times less risky than Mackenzie Core. The etf trades about 0.0 of its potential returns per unit of risk. The Mackenzie Core Plus is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,640  in Mackenzie Core Plus on September 1, 2024 and sell it today you would earn a total of  17.00  from holding Mackenzie Core Plus or generate 1.04% return on investment over 90 days.

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

Mackenzie TIPS Index  vs.  Mackenzie Core Plus

Mackenzie TIPS Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mackenzie TIPS Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mackenzie TIPS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Mackenzie Core Plus

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Core Plus are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Mackenzie Core 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 TIPS and Mackenzie Core

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

The idea behind Mackenzie TIPS Index and Mackenzie Core Plus 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.