Correlation Between CDN IMPERIAL and Nel ASA
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and Nel ASA 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 Nel ASA 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 Nel ASA, you can compare the effects of market volatilities on CDN IMPERIAL and Nel ASA 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 Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and Nel ASA.
Diversification Opportunities for CDN IMPERIAL and Nel ASA
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CDN and Nel is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA 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 Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and Nel ASA go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and Nel ASA
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.14 times more return on investment than Nel ASA. However, CDN IMPERIAL BANK is 6.93 times less risky than Nel ASA. It trades about 0.04 of its potential returns per unit of risk. Nel ASA is currently generating about -0.14 per unit of risk. If you would invest 6,133 in CDN IMPERIAL BANK on November 2, 2024 and sell it today you would earn a total of 38.00 from holding CDN IMPERIAL BANK or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. Nel ASA
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| Nel ASA |
CDN IMPERIAL and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and Nel ASA
The main advantage of trading using opposite CDN IMPERIAL and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.| CDN IMPERIAL vs. DISTRICT METALS | CDN IMPERIAL vs. Yuexiu Transport Infrastructure | CDN IMPERIAL vs. ECHO INVESTMENT ZY | CDN IMPERIAL vs. AGNC INVESTMENT |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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