Correlation Between IShares SPTSX and CI Canadian

Can any of the company-specific risk be diversified away by investing in both IShares SPTSX and CI Canadian 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 SPTSX and CI Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares SPTSX Capped and CI Canadian REIT, you can compare the effects of market volatilities on IShares SPTSX and CI Canadian 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 SPTSX with a short position of CI Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and CI Canadian.

Diversification Opportunities for IShares SPTSX and CI Canadian

-0.68

Correlation Coefficient

IShares SPTSX  CI Canadian

Excellent diversification

The 3 months correlation between IShares and RIT is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and CI Canadian REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canadian REIT and IShares SPTSX 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 SPTSX Capped are associated (or correlated) with CI Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canadian REIT has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and CI Canadian go up and down completely randomly.

Pair Corralation between IShares SPTSX and CI Canadian

Assuming the 90 days trading horizon iShares SPTSX Capped is expected to generate 1.99 times more return on investment than CI Canadian. However, IShares SPTSX is 1.99 times more volatile than CI Canadian REIT. It trades about 0.28 of its potential returns per unit of risk. CI Canadian REIT is currently generating about -0.08 per unit of risk. If you would invest  5,429  in iShares SPTSX Capped on September 4, 2024 and sell it today you would earn a total of  1,550  from holding iShares SPTSX Capped or generate 28.55% return on investment over 90 days.

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

iShares SPTSX Capped  vs.  CI Canadian REIT

iShares SPTSX Capped

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX Capped are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, IShares SPTSX displayed solid returns over the last few months and may actually be approaching a breakup point.

CI Canadian REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI Canadian REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CI Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares SPTSX and CI Canadian

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

The idea behind iShares SPTSX Capped and CI Canadian REIT 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.