Correlation Between CDN IMPERIAL and SolarEdge Technologies
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and SolarEdge Technologies 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 CDN IMPERIAL and SolarEdge Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDN IMPERIAL BANK and SolarEdge Technologies, you can compare the effects of market volatilities on CDN IMPERIAL and SolarEdge Technologies 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 CDN IMPERIAL with a short position of SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and SolarEdge Technologies.
Diversification Opportunities for CDN IMPERIAL and SolarEdge Technologies
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CDN and SolarEdge is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies and CDN IMPERIAL 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 CDN IMPERIAL BANK are associated (or correlated) with SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and SolarEdge Technologies go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and SolarEdge Technologies
Assuming the 90 days trading horizon CDN IMPERIAL is expected to generate 3.42 times less return on investment than SolarEdge Technologies. But when comparing it to its historical volatility, CDN IMPERIAL BANK is 7.3 times less risky than SolarEdge Technologies. It trades about 0.21 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,218 in SolarEdge Technologies on September 13, 2024 and sell it today you would earn a total of 142.00 from holding SolarEdge Technologies or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. SolarEdge Technologies
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| SolarEdge Technologies |
CDN IMPERIAL and SolarEdge Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and SolarEdge Technologies
The main advantage of trading using opposite CDN IMPERIAL and SolarEdge Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, SolarEdge Technologies 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 SolarEdge Technologies will offset losses from the drop in SolarEdge Technologies' long position.| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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