Correlation Between MegaLong Canadian and Iaadx
Can any of the company-specific risk be diversified away by investing in both MegaLong Canadian and Iaadx 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 MegaLong Canadian and Iaadx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MegaLong Canadian Banks and Iaadx, you can compare the effects of market volatilities on MegaLong Canadian and Iaadx 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 MegaLong Canadian with a short position of Iaadx. Check out your portfolio center. Please also check ongoing floating volatility patterns of MegaLong Canadian and Iaadx.
Diversification Opportunities for MegaLong Canadian and Iaadx
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MegaLong and Iaadx is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding MegaLong Canadian Banks and Iaadx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iaadx and MegaLong Canadian 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 MegaLong Canadian Banks are associated (or correlated) with Iaadx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iaadx has no effect on the direction of MegaLong Canadian i.e., MegaLong Canadian and Iaadx go up and down completely randomly.
Pair Corralation between MegaLong Canadian and Iaadx
Assuming the 90 days trading horizon MegaLong Canadian Banks is expected to generate 8.05 times more return on investment than Iaadx. However, MegaLong Canadian is 8.05 times more volatile than Iaadx. It trades about 0.27 of its potential returns per unit of risk. Iaadx is currently generating about 0.22 per unit of risk. If you would invest 2,951 in MegaLong Canadian Banks on September 5, 2025 and sell it today you would earn a total of 1,052 from holding MegaLong Canadian Banks or generate 35.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MegaLong Canadian Banks vs. Iaadx
Performance |
| Timeline |
| MegaLong Canadian Banks |
| Iaadx |
MegaLong Canadian and Iaadx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MegaLong Canadian and Iaadx
The main advantage of trading using opposite MegaLong Canadian and Iaadx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MegaLong Canadian position performs unexpectedly, Iaadx 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 Iaadx will offset losses from the drop in Iaadx's long position.| MegaLong Canadian vs. MegaLong Semiconductors Daily | MegaLong Canadian vs. MegaLong 20 Year | MegaLong Canadian vs. MegaLong Canadian Gold | MegaLong Canadian vs. MegaLong SP 500 |
| Iaadx vs. Western Asset Municipal | Iaadx vs. Alliancebernstein National Municipalome | Iaadx vs. Gmo High Yield | Iaadx vs. Bbh Intermediate Municipal |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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