Correlation Between Barclays PLC and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both Barclays PLC and Canadian 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 Barclays PLC and Canadian Imperial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays PLC ADR and Canadian Imperial Bank, you can compare the effects of market volatilities on Barclays PLC and Canadian 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 Barclays PLC with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and Canadian Imperial.
Diversification Opportunities for Barclays PLC and Canadian Imperial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barclays and Canadian is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC ADR and Canadian Imperial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank and Barclays PLC 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 Barclays PLC ADR are associated (or correlated) with Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of Barclays PLC i.e., Barclays PLC and Canadian Imperial go up and down completely randomly.
Pair Corralation between Barclays PLC and Canadian Imperial
Considering the 90-day investment horizon Barclays PLC ADR is expected to generate 1.59 times more return on investment than Canadian Imperial. However, Barclays PLC is 1.59 times more volatile than Canadian Imperial Bank. It trades about 0.07 of its potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.09 per unit of risk. If you would invest 713.00 in Barclays PLC ADR on August 23, 2024 and sell it today you would earn a total of 611.00 from holding Barclays PLC ADR or generate 85.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barclays PLC ADR vs. Canadian Imperial Bank
Performance |
| Timeline |
| Barclays PLC ADR |
| Canadian Imperial Bank |
Barclays PLC and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays PLC and Canadian Imperial
The main advantage of trading using opposite Barclays PLC and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC position performs unexpectedly, Canadian 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 Canadian Imperial will offset losses from the drop in Canadian Imperial's long position.| Barclays PLC vs. Banco Bilbao Viscaya | Barclays PLC vs. Banco Santander SA | Barclays PLC vs. UBS Group AG | Barclays PLC vs. HSBC Holdings PLC |
| Canadian Imperial vs. Bank of Montreal | Canadian Imperial vs. Toronto Dominion Bank | Canadian Imperial vs. Royal Bank of | Canadian Imperial vs. Citigroup |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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