Correlation Between Canadian Imperial and Linamar
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Linamar 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 Linamar 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 Linamar, you can compare the effects of market volatilities on Canadian Imperial and Linamar 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 Linamar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Linamar.
Diversification Opportunities for Canadian Imperial and Linamar
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and Linamar is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar 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 Linamar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linamar has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Linamar go up and down completely randomly.
Pair Corralation between Canadian Imperial and Linamar
Assuming the 90 days horizon Canadian Imperial Bank is expected to generate 0.66 times more return on investment than Linamar. However, Canadian Imperial Bank is 1.51 times less risky than Linamar. It trades about 0.22 of its potential returns per unit of risk. Linamar is currently generating about 0.0 per unit of risk. If you would invest 6,451 in Canadian Imperial Bank on September 3, 2024 and sell it today you would earn a total of 2,637 from holding Canadian Imperial Bank or generate 40.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. Linamar
Performance |
| Timeline |
| Canadian Imperial Bank |
| Linamar |
Canadian Imperial and Linamar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Linamar
The main advantage of trading using opposite Canadian Imperial and Linamar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Linamar 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 Linamar will offset losses from the drop in Linamar's long position.| Canadian Imperial vs. Bank of Montreal | Canadian Imperial vs. Bank of Nova | Canadian Imperial vs. Royal Bank of | Canadian Imperial vs. Toronto Dominion Bank |
| Linamar vs. Martinrea International | Linamar vs. Magna International | Linamar vs. CCL Industries | Linamar vs. Stella Jones |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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