Correlation Between Canadian Imperial and Everyday People
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Everyday People 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 Everyday People 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 Everyday People Financial, you can compare the effects of market volatilities on Canadian Imperial and Everyday People 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 Everyday People. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Everyday People.
Diversification Opportunities for Canadian Imperial and Everyday People
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canadian and Everyday is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Everyday People Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everyday People Financial 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 Everyday People. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everyday People Financial has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Everyday People go up and down completely randomly.
Pair Corralation between Canadian Imperial and Everyday People
Assuming the 90 days trading horizon Canadian Imperial Bank is expected to generate 0.06 times more return on investment than Everyday People. However, Canadian Imperial Bank is 17.57 times less risky than Everyday People. It trades about 0.09 of its potential returns per unit of risk. Everyday People Financial is currently generating about -0.04 per unit of risk. If you would invest 2,505 in Canadian Imperial Bank on August 29, 2024 and sell it today you would earn a total of 11.00 from holding Canadian Imperial Bank or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. Everyday People Financial
Performance |
| Timeline |
| Canadian Imperial Bank |
| Everyday People Financial |
Canadian Imperial and Everyday People Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Everyday People
The main advantage of trading using opposite Canadian Imperial and Everyday People positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Everyday People 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 Everyday People will offset losses from the drop in Everyday People's long position.The idea behind Canadian Imperial Bank and Everyday People Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Everyday People vs. American Hotel Income | Everyday People vs. Maple Peak Investments | Everyday People vs. Westshore Terminals Investment | Everyday People vs. Brookfield Investments |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |