Correlation Between CDN IMPERIAL and MEBUKI FINANCIAL
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and MEBUKI FINANCIAL 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 MEBUKI FINANCIAL 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 MEBUKI FINANCIAL GROUP, you can compare the effects of market volatilities on CDN IMPERIAL and MEBUKI FINANCIAL 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 MEBUKI FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and MEBUKI FINANCIAL.
Diversification Opportunities for CDN IMPERIAL and MEBUKI FINANCIAL
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CDN and MEBUKI is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and MEBUKI FINANCIAL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEBUKI FINANCIAL 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 MEBUKI FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEBUKI FINANCIAL has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and MEBUKI FINANCIAL go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and MEBUKI FINANCIAL
Assuming the 90 days trading horizon CDN IMPERIAL is expected to generate 1.28 times less return on investment than MEBUKI FINANCIAL. But when comparing it to its historical volatility, CDN IMPERIAL BANK is 1.67 times less risky than MEBUKI FINANCIAL. It trades about 0.1 of its potential returns per unit of risk. MEBUKI FINANCIAL GROUP is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 202.00 in MEBUKI FINANCIAL GROUP on September 3, 2024 and sell it today you would earn a total of 206.00 from holding MEBUKI FINANCIAL GROUP or generate 101.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. MEBUKI FINANCIAL GROUP
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| MEBUKI FINANCIAL |
CDN IMPERIAL and MEBUKI FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and MEBUKI FINANCIAL
The main advantage of trading using opposite CDN IMPERIAL and MEBUKI FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, MEBUKI FINANCIAL 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 MEBUKI FINANCIAL will offset losses from the drop in MEBUKI FINANCIAL's long position.| CDN IMPERIAL vs. TOTAL GABON | CDN IMPERIAL vs. Walgreens Boots Alliance | CDN IMPERIAL vs. Peak Resources Limited |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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