Correlation Between IShares Canadian and Stampede Drilling

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

Diversification Opportunities for IShares Canadian and Stampede Drilling

-0.69

Correlation Coefficient

IShares Canadian  Stampede Drilling

Excellent diversification

The 3 months correlation between IShares and Stampede is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling 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 Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of IShares Canadian i.e., IShares Canadian and Stampede Drilling go up and down completely randomly.

Pair Corralation between IShares Canadian and Stampede Drilling

Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 0.05 times more return on investment than Stampede Drilling. However, iShares Canadian HYBrid is 21.02 times less risky than Stampede Drilling. It trades about 0.08 of its potential returns per unit of risk. Stampede Drilling is currently generating about 0.0 per unit of risk. If you would invest  1,960  in iShares Canadian HYBrid on December 30, 2024 and sell it today you would earn a total of  29.00  from holding iShares Canadian HYBrid or generate 1.48% return on investment over 90 days.

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

iShares Canadian HYBrid  vs.  Stampede Drilling

iShares Canadian HYBrid

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 6 (%) 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.

Stampede Drilling

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares Canadian and Stampede Drilling

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

The idea behind iShares Canadian HYBrid and Stampede Drilling 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.