Correlation Between MegaShort and CI Canada

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

By analyzing existing cross correlation between MegaShort SP 500 and CI Canada Quality, you can compare the effects of market volatilities on MegaShort and CI Canada 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 MegaShort with a short position of CI Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of MegaShort and CI Canada.

Diversification Opportunities for MegaShort and CI Canada

0.57

Correlation Coefficient

MegaShort  CI Canada

Very weak diversification

The 3 months correlation between MegaShort and DGRC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding MegaShort SP 500 and CI Canada Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canada Quality and MegaShort 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 MegaShort SP 500 are associated (or correlated) with CI Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canada Quality has no effect on the direction of MegaShort i.e., MegaShort and CI Canada go up and down completely randomly.

Pair Corralation between MegaShort and CI Canada

Assuming the 90 days trading horizon MegaShort SP 500 is expected to under-perform the CI Canada. In addition to that, MegaShort is 2.67 times more volatile than CI Canada Quality. It trades about -0.33 of its total potential returns per unit of risk. CI Canada Quality is currently generating about 0.31 per unit of volatility. If you would invest  3,662  in CI Canada Quality on April 6, 2025 and sell it today you would earn a total of  603.00  from holding CI Canada Quality or generate 16.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	49.21%
Values	Daily Returns

MegaShort SP 500  vs.  CI Canada Quality

MegaShort SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days MegaShort SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

CI Canada Quality

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canada Quality are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Canada displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MegaShort and CI Canada

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

The idea behind MegaShort SP 500 and CI Canada Quality 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.