Correlation Between CI Canadian and CI ONE
Can any of the company-specific risk be diversified away by investing in both CI Canadian and CI ONE 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 CI Canadian and CI ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Canadian Short Term and CI ONE North, you can compare the effects of market volatilities on CI Canadian and CI ONE 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 CI Canadian with a short position of CI ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Canadian and CI ONE.
Diversification Opportunities for CI Canadian and CI ONE
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CAGS and ONEB is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding CI Canadian Short Term and CI ONE North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI ONE North and CI 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 CI Canadian Short Term are associated (or correlated) with CI ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI ONE North has no effect on the direction of CI Canadian i.e., CI Canadian and CI ONE go up and down completely randomly.
Pair Corralation between CI Canadian and CI ONE
Assuming the 90 days trading horizon CI Canadian is expected to generate 1.46 times less return on investment than CI ONE. But when comparing it to its historical volatility, CI Canadian Short Term is 1.69 times less risky than CI ONE. It trades about 0.18 of its potential returns per unit of risk. CI ONE North is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,899 in CI ONE North on September 13, 2024 and sell it today you would earn a total of 76.00 from holding CI ONE North or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Canadian Short Term vs. CI ONE North
Performance |
| Timeline |
| CI Canadian Short |
| CI ONE North |
CI Canadian and CI ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Canadian and CI ONE
The main advantage of trading using opposite CI Canadian and CI ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Canadian position performs unexpectedly, CI ONE 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 CI ONE will offset losses from the drop in CI ONE's long position.| CI Canadian vs. iShares Canadian Universe | CI Canadian vs. iShares Canadian Real | CI Canadian vs. iShares Core Canadian | CI Canadian vs. iShares Core Canadian |
| CI ONE vs. CI ONE Global | CI ONE vs. CI Yield Enhanced | CI ONE vs. CI MidCap Dividend | CI ONE vs. CI Canadian Short Term |
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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