Correlation Between Canadian Imperial and CI Financial
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and CI 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 Canadian Imperial and CI Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Imperial Bank and CI Financial Corp, you can compare the effects of market volatilities on Canadian Imperial and CI 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 Canadian Imperial with a short position of CI Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and CI Financial.
Diversification Opportunities for Canadian Imperial and CI Financial
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Canadian and CIX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial Corp and Canadian Imperial 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 Canadian Imperial Bank are associated (or correlated) with CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and CI Financial go up and down completely randomly.
Pair Corralation between Canadian Imperial and CI Financial
Assuming the 90 days trading horizon Canadian Imperial is expected to generate 14.46 times less return on investment than CI Financial. But when comparing it to its historical volatility, Canadian Imperial Bank is 6.87 times less risky than CI Financial. It trades about 0.18 of its potential returns per unit of risk. CI Financial Corp is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 2,126 in CI Financial Corp on August 24, 2024 and sell it today you would earn a total of 269.00 from holding CI Financial Corp or generate 12.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Canadian Imperial Bank vs. CI Financial Corp
Performance |
Timeline |
Canadian Imperial Bank |
CI Financial Corp |
Canadian Imperial and CI Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Canadian Imperial and CI Financial
The main advantage of trading using opposite Canadian Imperial and CI Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, CI 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 CI Financial will offset losses from the drop in CI Financial's long position.Canadian Imperial vs. Enbridge Pref 5 | Canadian Imperial vs. Enbridge Pref 11 | Canadian Imperial vs. E Split Corp | Canadian Imperial vs. E Split Corp |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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