Correlation Between CDN IMPERIAL and Coca Cola
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and Coca Cola 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 Coca Cola 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 The Coca Cola, you can compare the effects of market volatilities on CDN IMPERIAL and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and Coca Cola.
Diversification Opportunities for CDN IMPERIAL and Coca Cola
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CDN and Coca is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and Coca Cola go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and Coca Cola
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.96 times more return on investment than Coca Cola. However, CDN IMPERIAL BANK is 1.04 times less risky than Coca Cola. It trades about 0.3 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.07 per unit of risk. If you would invest 5,790 in CDN IMPERIAL BANK on August 31, 2024 and sell it today you would earn a total of 334.00 from holding CDN IMPERIAL BANK or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. The Coca Cola
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| Coca Cola |
CDN IMPERIAL and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and Coca Cola
The main advantage of trading using opposite CDN IMPERIAL and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| CDN IMPERIAL vs. SIMS METAL MGT | CDN IMPERIAL vs. Sterling Construction | CDN IMPERIAL vs. Jacquet Metal Service | CDN IMPERIAL vs. Australian Agricultural |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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