Correlation Between IShares Canadian and EcoSynthetix

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

Diversification Opportunities for IShares Canadian and EcoSynthetix

-0.64

Correlation Coefficient

IShares Canadian  EcoSynthetix

Excellent diversification

The 3 months correlation between IShares and EcoSynthetix is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and EcoSynthetix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EcoSynthetix 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 EcoSynthetix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EcoSynthetix has no effect on the direction of IShares Canadian i.e., IShares Canadian and EcoSynthetix go up and down completely randomly.

Pair Corralation between IShares Canadian and EcoSynthetix

Assuming the 90 days trading horizon IShares Canadian is expected to generate 1.17 times less return on investment than EcoSynthetix. But when comparing it to its historical volatility, iShares Canadian HYBrid is 6.63 times less risky than EcoSynthetix. It trades about 0.08 of its potential returns per unit of risk. EcoSynthetix is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  428.00  in EcoSynthetix on June 22, 2024 and sell it today you would earn a total of  5.00  from holding EcoSynthetix or generate 1.17% return on investment over 90 days.

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

iShares Canadian HYBrid  vs.  EcoSynthetix

iShares Canadian HYBrid

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 19 (%) 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.

EcoSynthetix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EcoSynthetix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with IShares Canadian and EcoSynthetix

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

The idea behind iShares Canadian HYBrid and EcoSynthetix 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.