Correlation Between CDN IMPERIAL and WESTERN DIGITAL
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and WESTERN DIGITAL 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 WESTERN DIGITAL 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 WESTERN DIGITAL, you can compare the effects of market volatilities on CDN IMPERIAL and WESTERN DIGITAL 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 WESTERN DIGITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and WESTERN DIGITAL.
Diversification Opportunities for CDN IMPERIAL and WESTERN DIGITAL
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CDN and WESTERN is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and WESTERN DIGITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN DIGITAL 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 WESTERN DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN DIGITAL has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and WESTERN DIGITAL go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and WESTERN DIGITAL
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.48 times more return on investment than WESTERN DIGITAL. However, CDN IMPERIAL BANK is 2.09 times less risky than WESTERN DIGITAL. It trades about 0.19 of its potential returns per unit of risk. WESTERN DIGITAL is currently generating about 0.07 per unit of risk. If you would invest 3,040 in CDN IMPERIAL BANK on October 16, 2024 and sell it today you would earn a total of 2,915 from holding CDN IMPERIAL BANK or generate 95.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. WESTERN DIGITAL
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| WESTERN DIGITAL |
CDN IMPERIAL and WESTERN DIGITAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and WESTERN DIGITAL
The main advantage of trading using opposite CDN IMPERIAL and WESTERN DIGITAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, WESTERN DIGITAL 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 WESTERN DIGITAL will offset losses from the drop in WESTERN DIGITAL's long position.| CDN IMPERIAL vs. JD SPORTS FASH | CDN IMPERIAL vs. AEON METALS LTD | CDN IMPERIAL vs. SIERRA METALS | CDN IMPERIAL vs. PARKEN Sport Entertainment |
| WESTERN DIGITAL vs. Direct Line Insurance | WESTERN DIGITAL vs. CVB Financial Corp | WESTERN DIGITAL vs. REVO INSURANCE SPA | WESTERN DIGITAL vs. CDN IMPERIAL BANK |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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