Correlation Between CDN IMPERIAL and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on CDN IMPERIAL and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and Spirent Communications.
Diversification Opportunities for CDN IMPERIAL and Spirent Communications
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CDN and Spirent is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and Spirent Communications go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and Spirent Communications
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to under-perform the Spirent Communications. But the stock apears to be less risky and, when comparing its historical volatility, CDN IMPERIAL BANK is 2.34 times less risky than Spirent Communications. The stock trades about -0.04 of its potential returns per unit of risk. The Spirent Communications plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 212.00 in Spirent Communications plc on November 8, 2024 and sell it today you would earn a total of 0.00 from holding Spirent Communications plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. Spirent Communications plc
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| Spirent Communications |
CDN IMPERIAL and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and Spirent Communications
The main advantage of trading using opposite CDN IMPERIAL and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| CDN IMPERIAL vs. X FAB Silicon Foundries | CDN IMPERIAL vs. US FOODS HOLDING | CDN IMPERIAL vs. MONEYSUPERMARKET | CDN IMPERIAL vs. CAL MAINE FOODS |
| Spirent Communications vs. BioNTech SE | Spirent Communications vs. Siamgas And Petrochemicals | Spirent Communications vs. Agilent Technologies | Spirent Communications vs. Genscript Biotech |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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