Correlation Between CI Financial and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both CI Financial 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 CI Financial and Canadian Imperial 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 Canadian Imperial Bank, you can compare the effects of market volatilities on CI Financial 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 CI Financial with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Financial and Canadian Imperial.
Diversification Opportunities for CI Financial and Canadian Imperial
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CIX and Canadian is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp 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 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 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 CI Financial i.e., CI Financial and Canadian Imperial go up and down completely randomly.
Pair Corralation between CI Financial and Canadian Imperial
Assuming the 90 days trading horizon CI Financial Corp is expected to generate 30.19 times more return on investment than Canadian Imperial. However, CI Financial is 30.19 times more volatile than Canadian Imperial Bank. It trades about 0.27 of its potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.12 per unit of risk. If you would invest 2,219 in CI Financial Corp on August 28, 2024 and sell it today you would earn a total of 903.00 from holding CI Financial Corp or generate 40.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Financial Corp vs. Canadian Imperial Bank
Performance |
| Timeline |
| CI Financial Corp |
| Canadian Imperial Bank |
CI Financial and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Financial and Canadian Imperial
The main advantage of trading using opposite CI Financial and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Financial 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.| CI Financial vs. IGM Financial | CI Financial vs. iA Financial | CI Financial vs. Canadian Western Bank | CI Financial vs. Great West Lifeco |
| Canadian Imperial vs. North American Construction | Canadian Imperial vs. Perseus Mining | Canadian Imperial vs. Costco Wholesale Corp | Canadian Imperial vs. Canlan Ice Sports |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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