Correlation Between Canadian Imperial and Signature Resources
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Signature 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 Signature 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 Signature Resources, you can compare the effects of market volatilities on Canadian Imperial and Signature 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 Signature Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Signature Resources.
Diversification Opportunities for Canadian Imperial and Signature Resources
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Canadian and Signature is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Signature Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signature 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 Signature Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signature Resources has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Signature Resources go up and down completely randomly.
Pair Corralation between Canadian Imperial and Signature Resources
Assuming the 90 days trading horizon Canadian Imperial is expected to generate 6.79 times less return on investment than Signature Resources. But when comparing it to its historical volatility, Canadian Imperial Bank is 16.01 times less risky than Signature Resources. It trades about 0.15 of its potential returns per unit of risk. Signature Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Signature Resources on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Signature Resources or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Canadian Imperial Bank vs. Signature Resources
Performance |
| Timeline |
| Canadian Imperial Bank |
| Signature Resources |
Canadian Imperial and Signature Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Signature Resources
The main advantage of trading using opposite Canadian Imperial and Signature Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Signature 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 Signature Resources will offset losses from the drop in Signature Resources' long position.| Canadian Imperial vs. Enbridge Pref 5 | Canadian Imperial vs. Enbridge Pref 11 | Canadian Imperial vs. Enbridge Pref L | Canadian Imperial vs. E Split Corp |
| Signature Resources vs. Canadian Imperial Bank | Signature Resources vs. US Financial 15 | Signature Resources vs. Definity Financial Corp | Signature Resources vs. Nicola Mining |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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