Correlation Between CDN IMPERIAL and FUYO GENERAL
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and FUYO GENERAL 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 FUYO GENERAL 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 FUYO GENERAL LEASE, you can compare the effects of market volatilities on CDN IMPERIAL and FUYO GENERAL 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 FUYO GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and FUYO GENERAL.
Diversification Opportunities for CDN IMPERIAL and FUYO GENERAL
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CDN and FUYO is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and FUYO GENERAL LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUYO GENERAL LEASE 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 FUYO GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUYO GENERAL LEASE has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and FUYO GENERAL go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and FUYO GENERAL
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.82 times more return on investment than FUYO GENERAL. However, CDN IMPERIAL BANK is 1.21 times less risky than FUYO GENERAL. It trades about 0.1 of its potential returns per unit of risk. FUYO GENERAL LEASE is currently generating about 0.03 per unit of risk. If you would invest 3,369 in CDN IMPERIAL BANK on September 3, 2024 and sell it today you would earn a total of 2,750 from holding CDN IMPERIAL BANK or generate 81.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. FUYO GENERAL LEASE
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| FUYO GENERAL LEASE |
CDN IMPERIAL and FUYO GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and FUYO GENERAL
The main advantage of trading using opposite CDN IMPERIAL and FUYO GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, FUYO GENERAL 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 FUYO GENERAL will offset losses from the drop in FUYO GENERAL's long position.| CDN IMPERIAL vs. TOTAL GABON | CDN IMPERIAL vs. Walgreens Boots Alliance | CDN IMPERIAL vs. Peak Resources Limited |
| FUYO GENERAL vs. United Rentals | FUYO GENERAL vs. Ashtead Group plc | FUYO GENERAL vs. WillScot Mobile Mini | FUYO GENERAL vs. Sixt SE |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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