Correlation Between IShares Canadian and A W

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

By analyzing existing cross correlation between iShares Canadian HYBrid and A W FOOD, you can compare the effects of market volatilities on IShares Canadian and A W 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 A W. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and A W.

Diversification Opportunities for IShares Canadian and A W

-0.14

Correlation Coefficient

IShares Canadian  A W

Good diversification

The 3 months correlation between IShares and A W is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and A W FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A W FOOD 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 HYBrid are associated (or correlated) with A W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A W FOOD has no effect on the direction of IShares Canadian i.e., IShares Canadian and A W go up and down completely randomly.

Pair Corralation between IShares Canadian and A W

Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 0.25 times more return on investment than A W. However, iShares Canadian HYBrid is 4.02 times less risky than A W. It trades about 0.12 of its potential returns per unit of risk. A W FOOD is currently generating about -0.14 per unit of risk. If you would invest  1,630  in iShares Canadian HYBrid on October 5, 2024 and sell it today you would earn a total of  351.00  from holding iShares Canadian HYBrid or generate 21.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	11.48%
Values	Daily Returns

iShares Canadian HYBrid  vs.  A W FOOD

iShares Canadian HYBrid

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

A W FOOD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A W FOOD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with IShares Canadian and A W

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

The idea behind iShares Canadian HYBrid and A W FOOD 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.