Correlation Between Canadian Imperial and High Liner
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and High Liner 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 High Liner 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 High Liner Foods, you can compare the effects of market volatilities on Canadian Imperial and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and High Liner.
Diversification Opportunities for Canadian Imperial and High Liner
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canadian and High is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and High Liner go up and down completely randomly.
Pair Corralation between Canadian Imperial and High Liner
Assuming the 90 days trading horizon Canadian Imperial is expected to generate 17.14 times less return on investment than High Liner. But when comparing it to its historical volatility, Canadian Imperial Bank is 8.59 times less risky than High Liner. It trades about 0.25 of its potential returns per unit of risk. High Liner Foods is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 1,286 in High Liner Foods on September 3, 2024 and sell it today you would earn a total of 255.00 from holding High Liner Foods or generate 19.83% 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. High Liner Foods
Performance |
| Timeline |
| Canadian Imperial Bank |
| High Liner Foods |
Canadian Imperial and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and High Liner
The main advantage of trading using opposite Canadian Imperial and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| Canadian Imperial vs. Enbridge Pref 11 | Canadian Imperial vs. E Split Corp | Canadian Imperial vs. E Split Corp | Canadian Imperial vs. Sage Potash Corp |
| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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