Correlation Between CIBC Clean and CIBC Qx
Can any of the company-specific risk be diversified away by investing in both CIBC Clean and CIBC Qx 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 Clean and CIBC Qx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIBC Clean Energy and CIBC Qx International, you can compare the effects of market volatilities on CIBC Clean and CIBC Qx 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 Clean with a short position of CIBC Qx. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIBC Clean and CIBC Qx.
Diversification Opportunities for CIBC Clean and CIBC Qx
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CIBC and CIBC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Clean Energy and CIBC Qx International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Qx International and CIBC Clean 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 Clean Energy are associated (or correlated) with CIBC Qx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Qx International has no effect on the direction of CIBC Clean i.e., CIBC Clean and CIBC Qx go up and down completely randomly.
Pair Corralation between CIBC Clean and CIBC Qx
Assuming the 90 days trading horizon CIBC Clean Energy is expected to generate 3.89 times more return on investment than CIBC Qx. However, CIBC Clean is 3.89 times more volatile than CIBC Qx International. It trades about 0.01 of its potential returns per unit of risk. CIBC Qx International is currently generating about -0.26 per unit of risk. If you would invest 834.00 in CIBC Clean Energy on August 29, 2024 and sell it today you would earn a total of 0.00 from holding CIBC Clean Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CIBC Clean Energy vs. CIBC Qx International
Performance |
| Timeline |
| CIBC Clean Energy |
| CIBC Qx International |
CIBC Clean and CIBC Qx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIBC Clean and CIBC Qx
The main advantage of trading using opposite CIBC Clean and CIBC Qx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIBC Clean position performs unexpectedly, CIBC Qx 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 Qx will offset losses from the drop in CIBC Qx's long position.| CIBC Clean vs. iShares SPTSX 60 | CIBC Clean vs. iShares Core SP | CIBC Clean vs. iShares Core SPTSX | CIBC Clean vs. BMO Aggregate Bond |
| CIBC Qx vs. iShares SPTSX 60 | CIBC Qx vs. iShares Core SP | CIBC Qx vs. iShares Core SPTSX | CIBC Qx vs. BMO Aggregate Bond |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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