Correlation Between Wealthsimple Developed and Wealthsimple Shariah

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

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

Diversification Opportunities for Wealthsimple Developed and Wealthsimple Shariah

0.81

Correlation Coefficient

Wealthsimple Developed  Wealthsimple Shariah

Very poor diversification

The 3 months correlation between Wealthsimple and Wealthsimple is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Wealthsimple Developed Markets and Wealthsimple Shariah World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wealthsimple Shariah and Wealthsimple Developed 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 Developed Markets are associated (or correlated) with Wealthsimple Shariah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wealthsimple Shariah has no effect on the direction of Wealthsimple Developed i.e., Wealthsimple Developed and Wealthsimple Shariah go up and down completely randomly.

Pair Corralation between Wealthsimple Developed and Wealthsimple Shariah

If you would invest  3,372  in Wealthsimple Developed Markets on August 20, 2025 and sell it today you would earn a total of  17.00  from holding Wealthsimple Developed Markets or generate 0.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Wealthsimple Developed Markets  vs.  Wealthsimple Shariah World

Wealthsimple Developed

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wealthsimple Developed Markets are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Wealthsimple Developed is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Wealthsimple Developed and Wealthsimple Shariah

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

The idea behind Wealthsimple Developed Markets and Wealthsimple Shariah World 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.