Correlation Between IShares Canadian and Clear Blue

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

Diversification Opportunities for IShares Canadian and Clear Blue

-0.43

Correlation Coefficient

IShares Canadian  Clear Blue

Very good diversification

The 3 months correlation between IShares and Clear is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Clear Blue Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clear Blue Technologies 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 Clear Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clear Blue Technologies has no effect on the direction of IShares Canadian i.e., IShares Canadian and Clear Blue go up and down completely randomly.

Pair Corralation between IShares Canadian and Clear Blue

Assuming the 90 days trading horizon IShares Canadian is expected to generate 11.82 times less return on investment than Clear Blue. But when comparing it to its historical volatility, iShares Canadian HYBrid is 58.31 times less risky than Clear Blue. It trades about 0.12 of its potential returns per unit of risk. Clear Blue Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Clear Blue Technologies on October 23, 2024 and sell it today you would lose (2.50) from holding Clear Blue Technologies or give up 50.0% of portfolio value over 90 days.

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

iShares Canadian HYBrid  vs.  Clear Blue Technologies

iShares Canadian HYBrid

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 9 (%) 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.

Clear Blue Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clear Blue Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Clear Blue showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Canadian and Clear Blue

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

The idea behind iShares Canadian HYBrid and Clear Blue Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.