Correlation Between CDN IMPERIAL and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS, you can compare the effects of market volatilities on CDN IMPERIAL and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and STMICROELECTRONICS.
Diversification Opportunities for CDN IMPERIAL and STMICROELECTRONICS
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CDN and STMICROELECTRONICS is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and STMICROELECTRONICS
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.5 times more return on investment than STMICROELECTRONICS. However, CDN IMPERIAL BANK is 2.01 times less risky than STMICROELECTRONICS. It trades about 0.16 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about -0.08 per unit of risk. If you would invest 3,882 in CDN IMPERIAL BANK on October 29, 2024 and sell it today you would earn a total of 2,149 from holding CDN IMPERIAL BANK or generate 55.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. STMICROELECTRONICS
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| STMICROELECTRONICS |
CDN IMPERIAL and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and STMICROELECTRONICS
The main advantage of trading using opposite CDN IMPERIAL and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| CDN IMPERIAL vs. New Residential Investment | CDN IMPERIAL vs. Scottish Mortgage Investment | CDN IMPERIAL vs. International Consolidated Airlines | CDN IMPERIAL vs. Japan Asia 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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