Correlation Between CI Financial and Brookfield
Can any of the company-specific risk be diversified away by investing in both CI Financial and Brookfield 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 CI Financial and Brookfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Financial Corp and Brookfield, you can compare the effects of market volatilities on CI Financial and Brookfield 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 CI Financial with a short position of Brookfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Financial and Brookfield.
Diversification Opportunities for CI Financial and Brookfield
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CIX and Brookfield is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and CI Financial 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 CI Financial Corp are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of CI Financial i.e., CI Financial and Brookfield go up and down completely randomly.
Pair Corralation between CI Financial and Brookfield
Assuming the 90 days trading horizon CI Financial Corp is expected to generate 0.4 times more return on investment than Brookfield. However, CI Financial Corp is 2.47 times less risky than Brookfield. It trades about 0.27 of its potential returns per unit of risk. Brookfield is currently generating about -0.16 per unit of risk. If you would invest 3,097 in CI Financial Corp on November 6, 2024 and sell it today you would earn a total of 33.00 from holding CI Financial Corp or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Financial Corp vs. Brookfield
Performance |
| Timeline |
| CI Financial Corp |
| Brookfield |
CI Financial and Brookfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Financial and Brookfield
The main advantage of trading using opposite CI Financial and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Financial position performs unexpectedly, Brookfield 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 Brookfield will offset losses from the drop in Brookfield's long position.| CI Financial vs. IGM Financial | CI Financial vs. iA Financial | CI Financial vs. Canadian Western Bank | CI Financial vs. Great West Lifeco |
| Brookfield vs. Thunderbird Entertainment Group | Brookfield vs. Data Communications Management | Brookfield vs. Postmedia Network Canada | Brookfield vs. Western Investment |
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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