Correlation Between CIBC Canadian and CIBC Conservative
Can any of the company-specific risk be diversified away by investing in both CIBC Canadian and CIBC Conservative 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 CIBC Canadian and CIBC Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIBC Canadian Equity and CIBC Conservative Fixed, you can compare the effects of market volatilities on CIBC Canadian and CIBC Conservative 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 CIBC Canadian with a short position of CIBC Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIBC Canadian and CIBC Conservative.
Diversification Opportunities for CIBC Canadian and CIBC Conservative
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CIBC and CIBC is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Canadian Equity and CIBC Conservative Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Conservative Fixed and CIBC Canadian 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 CIBC Canadian Equity are associated (or correlated) with CIBC Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Conservative Fixed has no effect on the direction of CIBC Canadian i.e., CIBC Canadian and CIBC Conservative go up and down completely randomly.
Pair Corralation between CIBC Canadian and CIBC Conservative
Assuming the 90 days trading horizon CIBC Canadian Equity is expected to generate 2.71 times more return on investment than CIBC Conservative. However, CIBC Canadian is 2.71 times more volatile than CIBC Conservative Fixed. It trades about 0.09 of its potential returns per unit of risk. CIBC Conservative Fixed is currently generating about 0.08 per unit of risk. If you would invest 2,044 in CIBC Canadian Equity on August 26, 2024 and sell it today you would earn a total of 709.00 from holding CIBC Canadian Equity or generate 34.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
CIBC Canadian Equity vs. CIBC Conservative Fixed
Performance |
| Timeline |
| CIBC Canadian Equity |
| CIBC Conservative Fixed |
CIBC Canadian and CIBC Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIBC Canadian and CIBC Conservative
The main advantage of trading using opposite CIBC Canadian and CIBC Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIBC Canadian position performs unexpectedly, CIBC Conservative 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 CIBC Conservative will offset losses from the drop in CIBC Conservative's long position.| CIBC Canadian vs. iShares SPTSX 60 | CIBC Canadian vs. iShares Core SP | CIBC Canadian vs. iShares SPTSX Composite | CIBC Canadian vs. iShares Core MSCI |
| CIBC Conservative vs. CIBC Core Fixed | CIBC Conservative vs. CIBC Canadian Equity | CIBC Conservative vs. CIBC Clean Energy | CIBC Conservative vs. CIBC Qx Low |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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