Correlation Between IShares Canadian and Titan Mining

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

Diversification Opportunities for IShares Canadian and Titan Mining

-0.35

Correlation Coefficient

IShares Canadian  Titan Mining

Very good diversification

The 3 months correlation between IShares and Titan is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Titan Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Mining 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 Titan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Mining Corp has no effect on the direction of IShares Canadian i.e., IShares Canadian and Titan Mining go up and down completely randomly.

Pair Corralation between IShares Canadian and Titan Mining

Assuming the 90 days trading horizon IShares Canadian is expected to generate 162.91 times less return on investment than Titan Mining. But when comparing it to its historical volatility, iShares Canadian HYBrid is 26.06 times less risky than Titan Mining. It trades about 0.02 of its potential returns per unit of risk. Titan Mining Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Titan Mining Corp on October 4, 2024 and sell it today you would earn a total of  4.00  from holding Titan Mining Corp or generate 14.81% 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.  Titan Mining Corp

iShares Canadian HYBrid

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 10 (%) 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.

Titan Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Titan Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Canadian and Titan Mining

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

The idea behind iShares Canadian HYBrid and Titan Mining 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.