Correlation Between IShares Canadian and Mackenzie Core

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

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

Diversification Opportunities for IShares Canadian and Mackenzie Core

0.44

Correlation Coefficient

IShares Canadian  Mackenzie Core

Very weak diversification

The 3 months correlation between IShares and Mackenzie is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Value 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 IShares 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 iShares Canadian Value 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 IShares Canadian i.e., IShares Canadian and Mackenzie Core go up and down completely randomly.

Pair Corralation between IShares Canadian and Mackenzie Core

Assuming the 90 days trading horizon iShares Canadian Value is expected to generate 1.61 times more return on investment than Mackenzie Core. However, IShares Canadian is 1.61 times more volatile than Mackenzie Core Plus. It trades about 0.14 of its potential returns per unit of risk. Mackenzie Core Plus is currently generating about 0.08 per unit of risk. If you would invest  3,628  in iShares Canadian Value on December 4, 2024 and sell it today you would earn a total of  355.00  from holding iShares Canadian Value or generate 9.79% return on investment over 90 days.

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

iShares Canadian Value  vs.  Mackenzie Core Plus

iShares Canadian Value

Risk-Adjusted Performance

Very Weak

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

Mackenzie Core Plus

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Core Plus are ranked lower than 5 (%) 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 IShares Canadian and Mackenzie Core

The main advantage of trading using opposite IShares Canadian and Mackenzie Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian 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 iShares Canadian Value 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.