Correlation Between IShares Core and CI WisdomTree

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

Diversification Opportunities for IShares Core and CI WisdomTree

0.89

Correlation Coefficient

IShares Core  CI WisdomTree

Very poor diversification

The 3 months correlation between IShares and IQD-B is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and CI WisdomTree International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI WisdomTree Intern 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 CI WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI WisdomTree Intern has no effect on the direction of IShares Core i.e., IShares Core and CI WisdomTree go up and down completely randomly.

Pair Corralation between IShares Core and CI WisdomTree

Assuming the 90 days trading horizon iShares Core SP is expected to under-perform the CI WisdomTree. In addition to that, IShares Core is 1.41 times more volatile than CI WisdomTree International. It trades about -0.2 of its total potential returns per unit of risk. CI WisdomTree International is currently generating about -0.13 per unit of volatility. If you would invest  3,027  in CI WisdomTree International on February 2, 2024 and sell it today you would lose (48.00) from holding CI WisdomTree International or give up 1.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

iShares Core SP  vs.  CI WisdomTree International

iShares Core SP

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI WisdomTree Intern

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI WisdomTree International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, CI WisdomTree is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Core and CI WisdomTree

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

The idea behind iShares Core SP and CI WisdomTree International 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.