Correlation Between IShares SPTSX and Cannara Biotech

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

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

Diversification Opportunities for IShares SPTSX and Cannara Biotech

-0.17

Correlation Coefficient

IShares SPTSX  Cannara Biotech

Good diversification

The 3 months correlation between IShares and Cannara is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and Cannara Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannara Biotech and IShares SPTSX 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 SPTSX Capped are associated (or correlated) with Cannara Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannara Biotech has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Cannara Biotech go up and down completely randomly.

Pair Corralation between IShares SPTSX and Cannara Biotech

Assuming the 90 days trading horizon iShares SPTSX Capped is expected to generate 0.37 times more return on investment than Cannara Biotech. However, iShares SPTSX Capped is 2.73 times less risky than Cannara Biotech. It trades about 0.04 of its potential returns per unit of risk. Cannara Biotech is currently generating about 0.01 per unit of risk. If you would invest  1,356  in iShares SPTSX Capped on September 25, 2024 and sell it today you would earn a total of  321.00  from holding iShares SPTSX Capped or generate 23.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

iShares SPTSX Capped  vs.  Cannara Biotech

iShares SPTSX Capped

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cannara Biotech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cannara Biotech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cannara Biotech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares SPTSX and Cannara Biotech

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

The idea behind iShares SPTSX Capped and Cannara Biotech 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.