Correlation Between IShares Core and Purpose Canadian

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

Diversification Opportunities for IShares Core and Purpose Canadian

0.95

Correlation Coefficient

IShares Core  Purpose Canadian

Almost no diversification

The 3 months correlation between IShares and Purpose is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Purpose Canadian Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Canadian Pre 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 Purpose Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Canadian Pre has no effect on the direction of IShares Core i.e., IShares Core and Purpose Canadian go up and down completely randomly.

Pair Corralation between IShares Core and Purpose Canadian

Assuming the 90 days trading horizon iShares Core SP is expected to generate 3.24 times more return on investment than Purpose Canadian. However, IShares Core is 3.24 times more volatile than Purpose Canadian Preferred. It trades about 0.34 of its potential returns per unit of risk. Purpose Canadian Preferred is currently generating about 0.75 per unit of risk. If you would invest  5,542  in iShares Core SP on April 23, 2025 and sell it today you would earn a total of  938.00  from holding iShares Core SP or generate 16.93% 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.  Purpose Canadian Preferred

iShares Core SP

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 26 (%) 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.

Purpose Canadian Pre

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Canadian Preferred are ranked lower than 59 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Purpose Canadian may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IShares Core and Purpose Canadian

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

The idea behind iShares Core SP and Purpose Canadian Preferred 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.