Correlation Between Canadian Imperial and CNJ Capital
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and CNJ Capital 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 CNJ Capital 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 CNJ Capital Investments, you can compare the effects of market volatilities on Canadian Imperial and CNJ Capital 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 CNJ Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and CNJ Capital.
Diversification Opportunities for Canadian Imperial and CNJ Capital
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Canadian and CNJ is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and CNJ Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNJ Capital Investments 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 CNJ Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNJ Capital Investments has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and CNJ Capital go up and down completely randomly.
Pair Corralation between Canadian Imperial and CNJ Capital
Assuming the 90 days trading horizon Canadian Imperial is expected to generate 8.15 times less return on investment than CNJ Capital. But when comparing it to its historical volatility, Canadian Imperial Bank is 7.03 times less risky than CNJ Capital. It trades about 0.07 of its potential returns per unit of risk. CNJ Capital Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 15.00 in CNJ Capital Investments on September 3, 2024 and sell it today you would earn a total of 31.00 from holding CNJ Capital Investments or generate 206.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 76.05% |
| Values | Daily Returns |
Canadian Imperial Bank vs. CNJ Capital Investments
Performance |
| Timeline |
| Canadian Imperial Bank |
| CNJ Capital Investments |
Canadian Imperial and CNJ Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and CNJ Capital
The main advantage of trading using opposite Canadian Imperial and CNJ Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, CNJ Capital 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 CNJ Capital will offset losses from the drop in CNJ Capital's long position.| Canadian Imperial vs. E Split Corp | Canadian Imperial vs. E Split Corp | Canadian Imperial vs. Sage Potash Corp |
| CNJ Capital vs. Colliers International Group | CNJ Capital vs. Altus Group Limited | CNJ Capital vs. Harvest Global REIT | CNJ Capital vs. International Zeolite Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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