Correlation Between Wealthsimple Shariah and General European

Can any of the company-specific risk be diversified away by investing in both Wealthsimple Shariah and General European 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 General European 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 General European Strategic, you can compare the effects of market volatilities on Wealthsimple Shariah and General European 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 General European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wealthsimple Shariah and General European.

Diversification Opportunities for Wealthsimple Shariah and General European

-0.29

Correlation Coefficient

Wealthsimple Shariah  General European

Very good diversification

The 3 months correlation between Wealthsimple and General is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wealthsimple Shariah World and General European Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General European Str 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 General European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General European Str has no effect on the direction of Wealthsimple Shariah i.e., Wealthsimple Shariah and General European go up and down completely randomly.

Pair Corralation between Wealthsimple Shariah and General European

Assuming the 90 days trading horizon Wealthsimple Shariah is expected to generate 1939.42 times less return on investment than General European. But when comparing it to its historical volatility, Wealthsimple Shariah World is 148.15 times less risky than General European. It trades about 0.01 of its potential returns per unit of risk. General European Strategic is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.10  in General European Strategic on September 8, 2025 and sell it today you would earn a total of  0.00  from holding General European Strategic or generate 0.0% 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.  General European Strategic

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.

General European Str

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in General European Strategic are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, General European demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wealthsimple Shariah and General European

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

The idea behind Wealthsimple Shariah World and General European Strategic 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.