Correlation Between IShares Canadian and BCM Resources

Can any of the company-specific risk be diversified away by investing in both IShares Canadian and BCM Resources 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 BCM Resources 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 BCM Resources Corp, you can compare the effects of market volatilities on IShares Canadian and BCM Resources 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 BCM Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and BCM Resources.

Diversification Opportunities for IShares Canadian and BCM Resources

0.57

Correlation Coefficient

IShares Canadian  BCM Resources

Very weak diversification

The 3 months correlation between IShares and BCM is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and BCM Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCM Resources Corp 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 BCM Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCM Resources Corp has no effect on the direction of IShares Canadian i.e., IShares Canadian and BCM Resources go up and down completely randomly.

Pair Corralation between IShares Canadian and BCM Resources

If you would invest  5.00  in BCM Resources Corp on October 10, 2024 and sell it today you would lose (0.50) from holding BCM Resources Corp or give up 10.0% of portfolio value over 90 days.

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

iShares Canadian HYBrid  vs.  BCM Resources Corp

iShares Canadian HYBrid

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 8 (%) 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.

BCM Resources Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BCM Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, BCM Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Canadian and BCM Resources

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

The idea behind iShares Canadian HYBrid and BCM Resources Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..