Correlation Between Canadian Imperial and Ramp Metals
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Ramp Metals 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 Ramp Metals 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 Ramp Metals, you can compare the effects of market volatilities on Canadian Imperial and Ramp Metals 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 Ramp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Ramp Metals.
Diversification Opportunities for Canadian Imperial and Ramp Metals
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canadian and Ramp is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Ramp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramp Metals 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 Ramp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramp Metals has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Ramp Metals go up and down completely randomly.
Pair Corralation between Canadian Imperial and Ramp Metals
Assuming the 90 days trading horizon Canadian Imperial Bank is expected to generate 0.05 times more return on investment than Ramp Metals. However, Canadian Imperial Bank is 20.27 times less risky than Ramp Metals. It trades about 0.21 of its potential returns per unit of risk. Ramp Metals is currently generating about 0.0 per unit of risk. If you would invest 2,503 in Canadian Imperial Bank on September 5, 2024 and sell it today you would earn a total of 24.00 from holding Canadian Imperial Bank or generate 0.96% 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. Ramp Metals
Performance |
| Timeline |
| Canadian Imperial Bank |
| Ramp Metals |
Canadian Imperial and Ramp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Ramp Metals
The main advantage of trading using opposite Canadian Imperial and Ramp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Ramp Metals 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 Ramp Metals will offset losses from the drop in Ramp Metals' long position.The idea behind Canadian Imperial Bank and Ramp Metals 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.| Ramp Metals vs. Brookfield Investments | Ramp Metals vs. Datable Technology Corp | Ramp Metals vs. A W FOOD | Ramp Metals vs. Bip Investment 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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