Correlation Between IShares Canadian and Zonte Metals

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

Diversification Opportunities for IShares Canadian and Zonte Metals

0.8

Correlation Coefficient

IShares Canadian  Zonte Metals

Very poor diversification

The 3 months correlation between IShares and Zonte is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Zonte Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zonte Metals 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 Zonte Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zonte Metals has no effect on the direction of IShares Canadian i.e., IShares Canadian and Zonte Metals go up and down completely randomly.

Pair Corralation between IShares Canadian and Zonte Metals

Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to under-perform the Zonte Metals. But the etf apears to be less risky and, when comparing its historical volatility, iShares Canadian HYBrid is 26.39 times less risky than Zonte Metals. The etf trades about -0.03 of its potential returns per unit of risk. The Zonte Metals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Zonte Metals on October 5, 2024 and sell it today you would earn a total of  1.00  from holding Zonte Metals or generate 12.5% return on investment over 90 days.

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

iShares Canadian HYBrid  vs.  Zonte Metals

iShares Canadian HYBrid

Risk-Adjusted Performance

11 of 100

OK

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.

Zonte Metals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zonte Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zonte Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Canadian and Zonte Metals

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

The idea behind iShares Canadian HYBrid and Zonte Metals 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.