Correlation Between Canadian General and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both Canadian General and Canadian Imperial 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 Canadian General and Canadian Imperial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian General Investments and Canadian Imperial Bank, you can compare the effects of market volatilities on Canadian General and Canadian Imperial 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 Canadian General with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Canadian Imperial.
Diversification Opportunities for Canadian General and Canadian Imperial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Canadian and Canadian is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Canadian Imperial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank and Canadian General 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 Canadian General Investments are associated (or correlated) with Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of Canadian General i.e., Canadian General and Canadian Imperial go up and down completely randomly.
Pair Corralation between Canadian General and Canadian Imperial
Assuming the 90 days trading horizon Canadian General is expected to generate 1.28 times less return on investment than Canadian Imperial. In addition to that, Canadian General is 4.48 times more volatile than Canadian Imperial Bank. It trades about 0.04 of its total potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.23 per unit of volatility. If you would invest 2,508 in Canadian Imperial Bank on September 12, 2024 and sell it today you would earn a total of 26.00 from holding Canadian Imperial Bank or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian General Investments vs. Canadian Imperial Bank
Performance |
| Timeline |
| Canadian General Inv |
| Canadian Imperial Bank |
Canadian General and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian General and Canadian Imperial
The main advantage of trading using opposite Canadian General and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General position performs unexpectedly, Canadian Imperial 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 Canadian Imperial will offset losses from the drop in Canadian Imperial's long position.| Canadian General vs. Brompton Lifeco Split | Canadian General vs. North American Financial | Canadian General vs. Prime Dividend Corp | Canadian General vs. Financial 15 Split |
| Canadian Imperial vs. Enbridge Pref 5 | Canadian Imperial vs. Enbridge Pref 11 | Canadian Imperial vs. Enbridge Pref L | Canadian Imperial vs. E Split Corp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |