Correlation Between IShares Core and CI Gold

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

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

Diversification Opportunities for IShares Core and CI Gold

0.54

Correlation Coefficient

IShares Core  CI Gold

Very weak diversification

The 3 months correlation between IShares and CGXF is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Canadian and CI Gold Giants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Gold Giants and IShares Core 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 Core Canadian are associated (or correlated) with CI Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Gold Giants has no effect on the direction of IShares Core i.e., IShares Core and CI Gold go up and down completely randomly.

Pair Corralation between IShares Core and CI Gold

Assuming the 90 days trading horizon IShares Core is expected to generate 20.09 times less return on investment than CI Gold. But when comparing it to its historical volatility, iShares Core Canadian is 1.98 times less risky than CI Gold. It trades about 0.03 of its potential returns per unit of risk. CI Gold Giants is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  990.00  in CI Gold Giants on December 30, 2024 and sell it today you would earn a total of  337.00  from holding CI Gold Giants or generate 34.04% return on investment over 90 days.

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

iShares Core Canadian  vs.  CI Gold Giants

iShares Core Canadian

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Canadian are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI Gold Giants

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CI Gold Giants are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and CI Gold

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

The idea behind iShares Core Canadian and CI Gold Giants 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.