Correlation Between FB Financial and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both FB Financial and CDN IMPERIAL 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 FB Financial and CDN IMPERIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FB Financial and CDN IMPERIAL BANK, you can compare the effects of market volatilities on FB Financial and CDN IMPERIAL 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 FB Financial with a short position of CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of FB Financial and CDN IMPERIAL.
Diversification Opportunities for FB Financial and CDN IMPERIAL
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 2J2 and CDN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FB Financial and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK and FB Financial 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 FB Financial are associated (or correlated) with CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of FB Financial i.e., FB Financial and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between FB Financial and CDN IMPERIAL
Assuming the 90 days horizon FB Financial is expected to generate 3.29 times more return on investment than CDN IMPERIAL. However, FB Financial is 3.29 times more volatile than CDN IMPERIAL BANK. It trades about 0.21 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.04 per unit of risk. If you would invest 4,180 in FB Financial on September 21, 2024 and sell it today you would earn a total of 780.00 from holding FB Financial or generate 18.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FB Financial vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| FB Financial |
| CDN IMPERIAL BANK |
FB Financial and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FB Financial and CDN IMPERIAL
The main advantage of trading using opposite FB Financial and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FB Financial position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| FB Financial vs. ALIOR BANK | FB Financial vs. COMINTL BANK ADR1 | FB Financial vs. QBE Insurance Group | FB Financial vs. Webster Financial |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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