Correlation Between IShares Canadian and Infinico Metals

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

Diversification Opportunities for IShares Canadian and Infinico Metals

0.09

Correlation Coefficient

IShares Canadian  Infinico Metals

Significant diversification

The 3 months correlation between IShares and Infinico is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Infinico Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinico Metals 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 Infinico Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinico Metals Corp has no effect on the direction of IShares Canadian i.e., IShares Canadian and Infinico Metals go up and down completely randomly.

Pair Corralation between IShares Canadian and Infinico Metals

Assuming the 90 days trading horizon IShares Canadian is expected to generate 42.53 times less return on investment than Infinico Metals. But when comparing it to its historical volatility, iShares Canadian HYBrid is 67.4 times less risky than Infinico Metals. It trades about 0.09 of its potential returns per unit of risk. Infinico Metals Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Infinico Metals Corp on December 24, 2024 and sell it today you would lose (0.50) from holding Infinico Metals Corp or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

iShares Canadian HYBrid  vs.  Infinico Metals Corp

iShares Canadian HYBrid

Risk-Adjusted Performance

OK

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

Infinico Metals Corp

Risk-Adjusted Performance

Insignificant

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

Pair Trading with IShares Canadian and Infinico Metals

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

The idea behind iShares Canadian HYBrid and Infinico Metals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.