Correlation Between Canadian Imperial and Big Pharma
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Big Pharma 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 Big Pharma 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 Big Pharma Split, you can compare the effects of market volatilities on Canadian Imperial and Big Pharma 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 Big Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Big Pharma.
Diversification Opportunities for Canadian Imperial and Big Pharma
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and Big is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Big Pharma Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Pharma Split 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 Big Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Pharma Split has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Big Pharma go up and down completely randomly.
Pair Corralation between Canadian Imperial and Big Pharma
Assuming the 90 days horizon Canadian Imperial Bank is expected to generate 0.78 times more return on investment than Big Pharma. However, Canadian Imperial Bank is 1.29 times less risky than Big Pharma. It trades about -0.02 of its potential returns per unit of risk. Big Pharma Split is currently generating about -0.03 per unit of risk. If you would invest 9,132 in Canadian Imperial Bank on October 24, 2024 and sell it today you would lose (35.00) from holding Canadian Imperial Bank or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. Big Pharma Split
Performance |
| Timeline |
| Canadian Imperial Bank |
| Big Pharma Split |
Canadian Imperial and Big Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Big Pharma
The main advantage of trading using opposite Canadian Imperial and Big Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Big Pharma 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 Big Pharma will offset losses from the drop in Big Pharma'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 |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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