Correlation Between Wealthsimple Shariah and Wealthsimple North

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

By analyzing existing cross correlation between Wealthsimple Shariah World and Wealthsimple North American, you can compare the effects of market volatilities on Wealthsimple Shariah and Wealthsimple North 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 Wealthsimple Shariah with a short position of Wealthsimple North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wealthsimple Shariah and Wealthsimple North.

Diversification Opportunities for Wealthsimple Shariah and Wealthsimple North

0.26

Correlation Coefficient

Wealthsimple Shariah  Wealthsimple North

Modest diversification

The 3 months correlation between Wealthsimple and Wealthsimple is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Wealthsimple Shariah World and Wealthsimple North American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wealthsimple North and Wealthsimple Shariah 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 Wealthsimple Shariah World are associated (or correlated) with Wealthsimple North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wealthsimple North has no effect on the direction of Wealthsimple Shariah i.e., Wealthsimple Shariah and Wealthsimple North go up and down completely randomly.

Pair Corralation between Wealthsimple Shariah and Wealthsimple North

Assuming the 90 days trading horizon Wealthsimple Shariah World is expected to generate 2.39 times more return on investment than Wealthsimple North. However, Wealthsimple Shariah is 2.39 times more volatile than Wealthsimple North American. It trades about 0.14 of its potential returns per unit of risk. Wealthsimple North American is currently generating about 0.08 per unit of risk. If you would invest  2,982  in Wealthsimple Shariah World on April 20, 2025 and sell it today you would earn a total of  190.00  from holding Wealthsimple Shariah World or generate 6.37% return on investment over 90 days.

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

Wealthsimple Shariah World  vs.  Wealthsimple North American

Wealthsimple Shariah

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wealthsimple Shariah World are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Wealthsimple Shariah may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Wealthsimple North

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wealthsimple North American are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Wealthsimple North is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wealthsimple Shariah and Wealthsimple North

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

The idea behind Wealthsimple Shariah World and Wealthsimple North American 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.