Correlation Between Vanguard and Mackenzie Canadian

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

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

Diversification Opportunities for Vanguard and Mackenzie Canadian

0.96

Correlation Coefficient

Vanguard  Mackenzie Canadian

Almost no diversification

The 3 months correlation between Vanguard and Mackenzie is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and Mackenzie Canadian Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Canadian Ultra and Vanguard 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 Vanguard SP 500 are associated (or correlated) with Mackenzie Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Canadian Ultra has no effect on the direction of Vanguard i.e., Vanguard and Mackenzie Canadian go up and down completely randomly.

Pair Corralation between Vanguard and Mackenzie Canadian

Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 45.47 times more return on investment than Mackenzie Canadian. However, Vanguard is 45.47 times more volatile than Mackenzie Canadian Ultra. It trades about 0.35 of its potential returns per unit of risk. Mackenzie Canadian Ultra is currently generating about 0.77 per unit of risk. If you would invest  14,091  in Vanguard SP 500 on September 1, 2024 and sell it today you would earn a total of  945.00  from holding Vanguard SP 500 or generate 6.71% return on investment over 90 days.

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

Vanguard SP 500  vs.  Mackenzie Canadian Ultra

Vanguard SP 500

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP 500 are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vanguard displayed solid returns over the last few months and may actually be approaching a breakup point.

Mackenzie Canadian Ultra

Risk-Adjusted Performance

63 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Canadian Ultra are ranked lower than 63 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mackenzie Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vanguard and Mackenzie Canadian

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

The idea behind Vanguard SP 500 and Mackenzie Canadian Ultra 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 Commodity Directory module to find actively traded commodities issued by global exchanges.