Correlation Between CI Financial and Income Financial
Can any of the company-specific risk be diversified away by investing in both CI Financial and Income 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 Income 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 Income Financial Trust, you can compare the effects of market volatilities on CI Financial and Income 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 Income Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Financial and Income Financial.
Diversification Opportunities for CI Financial and Income Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CIX and Income is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and Income Financial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Financial Trust 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 Income Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Financial Trust has no effect on the direction of CI Financial i.e., CI Financial and Income Financial go up and down completely randomly.
Pair Corralation between CI Financial and Income Financial
Assuming the 90 days trading horizon CI Financial is expected to generate 4.1 times less return on investment than Income Financial. But when comparing it to its historical volatility, CI Financial Corp is 6.29 times less risky than Income Financial. It trades about 0.31 of its potential returns per unit of risk. Income Financial Trust is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 856.00 in Income Financial Trust on October 23, 2024 and sell it today you would earn a total of 43.00 from holding Income Financial Trust or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Financial Corp vs. Income Financial Trust
Performance |
| Timeline |
| CI Financial Corp |
| Income Financial Trust |
CI Financial and Income Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Financial and Income Financial
The main advantage of trading using opposite CI Financial and Income Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Financial position performs unexpectedly, Income 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 Income Financial will offset losses from the drop in Income 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 |
| Income Financial vs. Dividend Select 15 | Income Financial vs. Global Dividend Growth | Income Financial vs. Brompton Split Banc | Income Financial vs. Real Estate E Commerce |
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.
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