Correlation Between CDN IMPERIAL and TITAN MACHINERY
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and TITAN MACHINERY 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 TITAN MACHINERY 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 TITAN MACHINERY, you can compare the effects of market volatilities on CDN IMPERIAL and TITAN MACHINERY 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 TITAN MACHINERY. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and TITAN MACHINERY.
Diversification Opportunities for CDN IMPERIAL and TITAN MACHINERY
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CDN and TITAN is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and TITAN MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TITAN MACHINERY 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 TITAN MACHINERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TITAN MACHINERY has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and TITAN MACHINERY go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and TITAN MACHINERY
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.38 times more return on investment than TITAN MACHINERY. However, CDN IMPERIAL BANK is 2.61 times less risky than TITAN MACHINERY. It trades about 0.11 of its potential returns per unit of risk. TITAN MACHINERY is currently generating about -0.04 per unit of risk. If you would invest 3,303 in CDN IMPERIAL BANK on September 14, 2024 and sell it today you would earn a total of 3,064 from holding CDN IMPERIAL BANK or generate 92.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. TITAN MACHINERY
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| TITAN MACHINERY |
CDN IMPERIAL and TITAN MACHINERY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and TITAN MACHINERY
The main advantage of trading using opposite CDN IMPERIAL and TITAN MACHINERY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, TITAN MACHINERY 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 TITAN MACHINERY will offset losses from the drop in TITAN MACHINERY's long position.| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc |
| TITAN MACHINERY vs. Apple Inc | TITAN MACHINERY vs. Apple Inc | TITAN MACHINERY vs. Apple Inc | TITAN MACHINERY 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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