Correlation Between IShares Canadian and Hawkeye Gold

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

Diversification Opportunities for IShares Canadian and Hawkeye Gold

-0.15

Correlation Coefficient

IShares Canadian  Hawkeye Gold

Good diversification

The 3 months correlation between IShares and Hawkeye is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Hawkeye Gold and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkeye Gold 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 Hawkeye Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkeye Gold has no effect on the direction of IShares Canadian i.e., IShares Canadian and Hawkeye Gold go up and down completely randomly.

Pair Corralation between IShares Canadian and Hawkeye Gold

Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 0.03 times more return on investment than Hawkeye Gold. However, iShares Canadian HYBrid is 36.82 times less risky than Hawkeye Gold. It trades about 0.22 of its potential returns per unit of risk. Hawkeye Gold and is currently generating about 0.01 per unit of risk. If you would invest  1,956  in iShares Canadian HYBrid on September 5, 2024 and sell it today you would earn a total of  35.00  from holding iShares Canadian HYBrid or generate 1.79% return on investment over 90 days.

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

iShares Canadian HYBrid  vs.  Hawkeye Gold and

iShares Canadian HYBrid

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 12 (%) 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.

Hawkeye Gold

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkeye Gold and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Hawkeye Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Canadian and Hawkeye Gold

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

The idea behind iShares Canadian HYBrid and Hawkeye Gold and 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.