Correlation Between CI Financial and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both CI Financial and Verizon Communications 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 Verizon Communications 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 Verizon Communications CDR, you can compare the effects of market volatilities on CI Financial and Verizon Communications 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 Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Financial and Verizon Communications.
Diversification Opportunities for CI Financial and Verizon Communications
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CIX and Verizon is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and Verizon Communications CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of CI Financial i.e., CI Financial and Verizon Communications go up and down completely randomly.
Pair Corralation between CI Financial and Verizon Communications
Assuming the 90 days trading horizon CI Financial Corp is expected to generate 1.91 times more return on investment than Verizon Communications. However, CI Financial is 1.91 times more volatile than Verizon Communications CDR. It trades about 0.16 of its potential returns per unit of risk. Verizon Communications CDR is currently generating about 0.01 per unit of risk. If you would invest 1,265 in CI Financial Corp on October 18, 2024 and sell it today you would earn a total of 1,843 from holding CI Financial Corp or generate 145.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Financial Corp vs. Verizon Communications CDR
Performance |
| Timeline |
| CI Financial Corp |
| Verizon Communications |
CI Financial and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Financial and Verizon Communications
The main advantage of trading using opposite CI Financial and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Financial position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.| CI Financial vs. IGM Financial | CI Financial vs. iA Financial | CI Financial vs. Canadian Western Bank | CI Financial vs. Great West Lifeco |
| Verizon Communications vs. Firan Technology Group | Verizon Communications vs. Nova Leap Health | Verizon Communications vs. Converge Technology Solutions | Verizon Communications vs. Andlauer Healthcare Gr |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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