Correlation Between IShares Core and Canoe EIT

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

By analyzing existing cross correlation between iShares Core SP and Canoe EIT Income, you can compare the effects of market volatilities on IShares Core and Canoe EIT 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 Canoe EIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Canoe EIT.

Diversification Opportunities for IShares Core and Canoe EIT

0.93

Correlation Coefficient

IShares Core  Canoe EIT

Almost no diversification

The 3 months correlation between IShares and Canoe is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Canoe EIT Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoe EIT Income 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 SP are associated (or correlated) with Canoe EIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoe EIT Income has no effect on the direction of IShares Core i.e., IShares Core and Canoe EIT go up and down completely randomly.

Pair Corralation between IShares Core and Canoe EIT

Assuming the 90 days trading horizon iShares Core SP is expected to generate 2.87 times more return on investment than Canoe EIT. However, IShares Core is 2.87 times more volatile than Canoe EIT Income. It trades about 0.33 of its potential returns per unit of risk. Canoe EIT Income is currently generating about 0.16 per unit of risk. If you would invest  5,651  in iShares Core SP on April 24, 2025 and sell it today you would earn a total of  880.00  from holding iShares Core SP or generate 15.57% return on investment over 90 days.

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

iShares Core SP  vs.  Canoe EIT Income

iShares Core SP

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares Core displayed solid returns over the last few months and may actually be approaching a breakup point.

Canoe EIT Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canoe EIT Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canoe EIT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and Canoe EIT

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

The idea behind iShares Core SP and Canoe EIT Income 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.