Correlation Between Bank of New York and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both Bank of New York 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 Bank of New York and Canadian Imperial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of New and Canadian Imperial Bank, you can compare the effects of market volatilities on Bank of New York 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 Bank of New York with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and Canadian Imperial.
Diversification Opportunities for Bank of New York and Canadian Imperial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Canadian is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New 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 Bank of New York 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 Bank of New 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 Bank of New York i.e., Bank of New York and Canadian Imperial go up and down completely randomly.
Pair Corralation between Bank of New York and Canadian Imperial
Allowing for the 90-day total investment horizon Bank of New York is expected to generate 1.04 times less return on investment than Canadian Imperial. But when comparing it to its historical volatility, Bank of New is 1.01 times less risky than Canadian Imperial. It trades about 0.27 of its potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 5,399 in Canadian Imperial Bank on August 26, 2024 and sell it today you would earn a total of 1,143 from holding Canadian Imperial Bank or generate 21.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of New vs. Canadian Imperial Bank
Performance |
| Timeline |
| Bank of New York |
| Canadian Imperial Bank |
Bank of New York and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York and Canadian Imperial
The main advantage of trading using opposite Bank of New York and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York 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.| Bank of New York vs. Northern Trust | Bank of New York vs. Invesco Plc | Bank of New York vs. Franklin Resources | Bank of New York vs. T Rowe Price |
| Canadian Imperial vs. Toronto Dominion Bank | Canadian Imperial vs. Nu Holdings | Canadian Imperial vs. HSBC Holdings PLC | Canadian Imperial vs. Bank of Montreal |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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