Correlation Between IShares JP and Mackenzie High

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

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

Diversification Opportunities for IShares JP and Mackenzie High

0.83

Correlation Coefficient

IShares JP  Mackenzie High

Very poor diversification

The 3 months correlation between IShares and Mackenzie is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan and Mackenzie High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie High Yield and IShares JP 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 JP Morgan are associated (or correlated) with Mackenzie High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie High Yield has no effect on the direction of IShares JP i.e., IShares JP and Mackenzie High go up and down completely randomly.

Pair Corralation between IShares JP and Mackenzie High

Assuming the 90 days trading horizon iShares JP Morgan is expected to generate 0.86 times more return on investment than Mackenzie High. However, iShares JP Morgan is 1.17 times less risky than Mackenzie High. It trades about 0.11 of its potential returns per unit of risk. Mackenzie High Yield is currently generating about 0.04 per unit of risk. If you would invest  1,541  in iShares JP Morgan on December 31, 2024 and sell it today you would earn a total of  32.00  from holding iShares JP Morgan or generate 2.08% return on investment over 90 days.

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

iShares JP Morgan  vs.  Mackenzie High Yield

iShares JP Morgan

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares JP Morgan are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares JP is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mackenzie High Yield

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie High Yield are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mackenzie High 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 JP and Mackenzie High

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

The idea behind iShares JP Morgan and Mackenzie High Yield 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.