Correlation Between Canadian Imperial and ExGen Resources
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and ExGen Resources 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 ExGen Resources 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 ExGen Resources, you can compare the effects of market volatilities on Canadian Imperial and ExGen Resources 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 ExGen Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and ExGen Resources.
Diversification Opportunities for Canadian Imperial and ExGen Resources
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Canadian and ExGen is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and ExGen Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExGen Resources 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 ExGen Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExGen Resources has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and ExGen Resources go up and down completely randomly.
Pair Corralation between Canadian Imperial and ExGen Resources
Assuming the 90 days trading horizon Canadian Imperial is expected to generate 8.33 times less return on investment than ExGen Resources. But when comparing it to its historical volatility, Canadian Imperial Bank is 15.08 times less risky than ExGen Resources. It trades about 0.08 of its potential returns per unit of risk. ExGen Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 11.00 in ExGen Resources on August 29, 2024 and sell it today you would lose (3.00) from holding ExGen Resources or give up 27.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. ExGen Resources
Performance |
| Timeline |
| Canadian Imperial Bank |
| ExGen Resources |
Canadian Imperial and ExGen Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and ExGen Resources
The main advantage of trading using opposite Canadian Imperial and ExGen Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, ExGen Resources 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 ExGen Resources will offset losses from the drop in ExGen Resources' long position.| Canadian Imperial vs. Enbridge Pref L | Canadian Imperial vs. E Split Corp | Canadian Imperial vs. Sage Potash Corp |
| ExGen Resources vs. Canadian Imperial Bank | ExGen Resources vs. Pollard Banknote Limited | ExGen Resources vs. Definity Financial Corp | ExGen Resources vs. National Bank of |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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