Correlation Between IShares Canadian and Lifeist Wellness

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

Diversification Opportunities for IShares Canadian and Lifeist Wellness

-0.52

Correlation Coefficient

IShares Canadian  Lifeist Wellness

Excellent diversification

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

Pair Corralation between IShares Canadian and Lifeist Wellness

Assuming the 90 days trading horizon IShares Canadian is expected to generate 25.02 times less return on investment than Lifeist Wellness. But when comparing it to its historical volatility, iShares Canadian HYBrid is 56.18 times less risky than Lifeist Wellness. It trades about 0.13 of its potential returns per unit of risk. Lifeist Wellness is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Lifeist Wellness on December 5, 2024 and sell it today you would lose (102.50) from holding Lifeist Wellness or give up 96.7% 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.  Lifeist Wellness

iShares Canadian HYBrid

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 11 (%) 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.

Lifeist Wellness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifeist Wellness has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lifeist Wellness is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Canadian and Lifeist Wellness

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

The idea behind iShares Canadian HYBrid and Lifeist Wellness 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..