Correlation Between IShares Core and Elspec
Can any of the company-specific risk be diversified away by investing in both IShares Core and Elspec 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 Elspec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IShares Core SPTSX and Elspec, you can compare the effects of market volatilities on IShares Core and Elspec 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 Elspec. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Elspec.
Diversification Opportunities for IShares Core and Elspec
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Elspec is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding IShares Core SPTSX and Elspec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elspec 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 SPTSX are associated (or correlated) with Elspec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elspec has no effect on the direction of IShares Core i.e., IShares Core and Elspec go up and down completely randomly.
Pair Corralation between IShares Core and Elspec
Assuming the 90 days trading horizon IShares Core is expected to generate 8.63 times less return on investment than Elspec. But when comparing it to its historical volatility, IShares Core SPTSX is 3.69 times less risky than Elspec. It trades about 0.02 of its potential returns per unit of risk. Elspec is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 35,400 in Elspec on December 30, 2023 and sell it today you would earn a total of 21,600 from holding Elspec or generate 61.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 78.95% |
Values | Daily Returns |
IShares Core SPTSX vs. Elspec
Performance |
Timeline |
IShares Core SPTSX |
Elspec |
IShares Core and Elspec Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Core and Elspec
The main advantage of trading using opposite IShares Core and Elspec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Elspec 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 Elspec will offset losses from the drop in Elspec's long position.IShares Core vs. IShares SPTSX 60 | IShares Core vs. BMO SPTSX Capped | IShares Core vs. Vanguard FTSE Canada | IShares Core vs. Horizons SPTSX 60 |
Elspec vs. Black Sea Property | Elspec vs. Direct Capital Investments | Elspec vs. Aerodrome Group | Elspec vs. Israel China Biotechnology |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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