Correlation Between CI Financial and US Financial
Can any of the company-specific risk be diversified away by investing in both CI Financial and US Financial 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 US Financial 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 US Financial 15, you can compare the effects of market volatilities on CI Financial and US Financial 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 US Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Financial and US Financial.
Diversification Opportunities for CI Financial and US Financial
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CIX and FTU-PB is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and US Financial 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Financial 15 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 US Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Financial 15 has no effect on the direction of CI Financial i.e., CI Financial and US Financial go up and down completely randomly.
Pair Corralation between CI Financial and US Financial
Assuming the 90 days trading horizon CI Financial Corp is expected to generate 1.84 times more return on investment than US Financial. However, CI Financial is 1.84 times more volatile than US Financial 15. It trades about 0.24 of its potential returns per unit of risk. US Financial 15 is currently generating about 0.12 per unit of risk. If you would invest 1,380 in CI Financial Corp on August 28, 2024 and sell it today you would earn a total of 1,742 from holding CI Financial Corp or generate 126.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
CI Financial Corp vs. US Financial 15
Performance |
| Timeline |
| CI Financial Corp |
| US Financial 15 |
CI Financial and US Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Financial and US Financial
The main advantage of trading using opposite CI Financial and US Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Financial position performs unexpectedly, US Financial 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 US Financial will offset losses from the drop in US Financial'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 |
| US Financial vs. North American Financial | US Financial vs. Prime Dividend Corp | US Financial vs. Canadian Life Companies | US Financial vs. Financial 15 Split |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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