Correlation Between CIBC Core and CIBC Equity
Can any of the company-specific risk be diversified away by investing in both CIBC Core and CIBC Equity 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 Core and CIBC Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIBC Core Fixed and CIBC Equity Index, you can compare the effects of market volatilities on CIBC Core and CIBC Equity 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 Core with a short position of CIBC Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIBC Core and CIBC Equity.
Diversification Opportunities for CIBC Core and CIBC Equity
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CIBC and CIBC is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Core Fixed and CIBC Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Equity Index and CIBC Core 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 Core Fixed are associated (or correlated) with CIBC Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Equity Index has no effect on the direction of CIBC Core i.e., CIBC Core and CIBC Equity go up and down completely randomly.
Pair Corralation between CIBC Core and CIBC Equity
Assuming the 90 days trading horizon CIBC Core is expected to generate 5.75 times less return on investment than CIBC Equity. But when comparing it to its historical volatility, CIBC Core Fixed is 2.07 times less risky than CIBC Equity. It trades about 0.07 of its potential returns per unit of risk. CIBC Equity Index is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,486 in CIBC Equity Index on September 14, 2024 and sell it today you would earn a total of 924.00 from holding CIBC Equity Index or generate 37.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CIBC Core Fixed vs. CIBC Equity Index
Performance |
| Timeline |
| CIBC Core Fixed |
| CIBC Equity Index |
CIBC Core and CIBC Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIBC Core and CIBC Equity
The main advantage of trading using opposite CIBC Core and CIBC Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIBC Core position performs unexpectedly, CIBC Equity 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 Equity will offset losses from the drop in CIBC Equity's long position.| CIBC Core vs. CIBC Canadian Equity | CIBC Core vs. CIBC Clean Energy | CIBC Core vs. CIBC Conservative Fixed | CIBC Core vs. CIBC Qx Low |
| CIBC Equity vs. CIBC Core Fixed | CIBC Equity vs. CIBC Canadian Equity | CIBC Equity vs. CIBC Clean Energy | CIBC Equity vs. CIBC Conservative Fixed |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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