Correlation Between IShares Canadian and CI High

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

By analyzing existing cross correlation between iShares Canadian Universe and CI High Interest, you can compare the effects of market volatilities on IShares Canadian and CI High 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 CI High. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and CI High.

Diversification Opportunities for IShares Canadian and CI High

-0.31

Correlation Coefficient

IShares Canadian  CI High

Very good diversification

The 3 months correlation between IShares and CSAV is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Universe and CI High Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI High Interest 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 Universe are associated (or correlated) with CI High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI High Interest has no effect on the direction of IShares Canadian i.e., IShares Canadian and CI High go up and down completely randomly.

Pair Corralation between IShares Canadian and CI High

Assuming the 90 days trading horizon iShares Canadian Universe is expected to under-perform the CI High. In addition to that, IShares Canadian is 19.11 times more volatile than CI High Interest. It trades about -0.04 of its total potential returns per unit of risk. CI High Interest is currently generating about 0.62 per unit of volatility. If you would invest  4,979  in CI High Interest on April 22, 2025 and sell it today you would earn a total of  31.00  from holding CI High Interest or generate 0.62% return on investment over 90 days.

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

iShares Canadian Universe  vs.  CI High Interest

iShares Canadian Universe

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Canadian Universe has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

CI High Interest

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in CI High Interest are ranked lower than 48 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI High is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Canadian and CI High

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

The idea behind iShares Canadian Universe and CI High Interest 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.