Correlation Between CIBC Active and NBI Sustainable
Can any of the company-specific risk be diversified away by investing in both CIBC Active and NBI Sustainable 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 CIBC Active and NBI Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIBC Active Investment and NBI Sustainable Canadian, you can compare the effects of market volatilities on CIBC Active and NBI Sustainable 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 CIBC Active with a short position of NBI Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIBC Active and NBI Sustainable.
Diversification Opportunities for CIBC Active and NBI Sustainable
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CIBC and NBI is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Active Investment and NBI Sustainable Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Sustainable Canadian and CIBC Active 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 CIBC Active Investment are associated (or correlated) with NBI Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Sustainable Canadian has no effect on the direction of CIBC Active i.e., CIBC Active and NBI Sustainable go up and down completely randomly.
Pair Corralation between CIBC Active and NBI Sustainable
Assuming the 90 days trading horizon CIBC Active Investment is expected to generate 1.06 times more return on investment than NBI Sustainable. However, CIBC Active is 1.06 times more volatile than NBI Sustainable Canadian. It trades about 0.06 of its potential returns per unit of risk. NBI Sustainable Canadian is currently generating about 0.05 per unit of risk. If you would invest 1,780 in CIBC Active Investment on August 27, 2024 and sell it today you would earn a total of 213.00 from holding CIBC Active Investment or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CIBC Active Investment vs. NBI Sustainable Canadian
Performance |
| Timeline |
| CIBC Active Investment |
| NBI Sustainable Canadian |
CIBC Active and NBI Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIBC Active and NBI Sustainable
The main advantage of trading using opposite CIBC Active and NBI Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIBC Active position performs unexpectedly, NBI Sustainable 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 NBI Sustainable will offset losses from the drop in NBI Sustainable's long position.| CIBC Active vs. Franklin Global Aggregate | CIBC Active vs. Franklin Large Cap | CIBC Active vs. First Trust Senior | CIBC Active vs. BMO Aggregate Bond |
| NBI Sustainable vs. Franklin Global Aggregate | NBI Sustainable vs. Franklin Large Cap | NBI Sustainable vs. First Trust Senior | NBI Sustainable vs. BMO Aggregate Bond |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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