Correlation Between IShares Canadian and Liberty Defense

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and Liberty Defense 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 Liberty Defense 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 Liberty Defense Holdings, you can compare the effects of market volatilities on IShares Canadian and Liberty Defense 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 Liberty Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Liberty Defense.

Diversification Opportunities for IShares Canadian and Liberty Defense

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between IShares and Liberty is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Liberty Defense Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Defense Holdings 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 Liberty Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Defense Holdings has no effect on the direction of IShares Canadian i.e., IShares Canadian and Liberty Defense go up and down completely randomly.

Pair Corralation between IShares Canadian and Liberty Defense

Assuming the 90 days trading horizon IShares Canadian is expected to generate 73.01 times less return on investment than Liberty Defense. But when comparing it to its historical volatility, iShares Canadian HYBrid is 37.93 times less risky than Liberty Defense. It trades about 0.12 of its potential returns per unit of risk. Liberty Defense Holdings is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Liberty Defense Holdings on September 25, 2024 and sell it today you would earn a total of  22.00  from holding Liberty Defense Holdings or generate 57.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

iShares Canadian HYBrid  vs.  Liberty Defense Holdings

 Performance 
       Timeline  
iShares Canadian HYBrid 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 5 (%) 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.
Liberty Defense Holdings 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Defense Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Liberty Defense reported solid returns over the last few months and may actually be approaching a breakup point.

IShares Canadian and Liberty Defense Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares Canadian and Liberty Defense

The main advantage of trading using opposite IShares Canadian and Liberty Defense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, Liberty Defense 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 Liberty Defense will offset losses from the drop in Liberty Defense's long position.
The idea behind iShares Canadian HYBrid and Liberty Defense Holdings 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.
Check out your portfolio center.
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.

Other Complementary Tools

Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments