Correlation Between Wealthsimple Shariah and Alerian MLP

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

By analyzing existing cross correlation between Wealthsimple Shariah World and Alerian MLP ETF, you can compare the effects of market volatilities on Wealthsimple Shariah and Alerian MLP 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 Wealthsimple Shariah with a short position of Alerian MLP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wealthsimple Shariah and Alerian MLP.

Diversification Opportunities for Wealthsimple Shariah and Alerian MLP

-0.01

Correlation Coefficient

Wealthsimple Shariah  Alerian MLP

Good diversification

The 3 months correlation between Wealthsimple and Alerian is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wealthsimple Shariah World and Alerian MLP ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alerian MLP ETF and Wealthsimple Shariah 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 Wealthsimple Shariah World are associated (or correlated) with Alerian MLP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alerian MLP ETF has no effect on the direction of Wealthsimple Shariah i.e., Wealthsimple Shariah and Alerian MLP go up and down completely randomly.

Pair Corralation between Wealthsimple Shariah and Alerian MLP

Assuming the 90 days trading horizon Wealthsimple Shariah World is expected to under-perform the Alerian MLP. In addition to that, Wealthsimple Shariah is 1.03 times more volatile than Alerian MLP ETF. It trades about -0.01 of its total potential returns per unit of risk. Alerian MLP ETF is currently generating about 0.03 per unit of volatility. If you would invest  4,678  in Alerian MLP ETF on September 11, 2025 and sell it today you would earn a total of  62.00  from holding Alerian MLP ETF or generate 1.33% return on investment over 90 days.

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

Wealthsimple Shariah World  vs.  Alerian MLP ETF

Wealthsimple Shariah

Risk-Adjusted Performance

Weakest

Over the last 90 days Wealthsimple Shariah World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Wealthsimple Shariah is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Alerian MLP ETF

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alerian MLP ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Alerian MLP is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Wealthsimple Shariah and Alerian MLP

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

The idea behind Wealthsimple Shariah World and Alerian MLP ETF 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.