Correlation Between Canadian Imperial and Timbercreek Financial
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Timbercreek Financial 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 Timbercreek Financial 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 Timbercreek Financial Corp, you can compare the effects of market volatilities on Canadian Imperial and Timbercreek Financial 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 Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Timbercreek Financial.
Diversification Opportunities for Canadian Imperial and Timbercreek Financial
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and Timbercreek is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial 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 Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Timbercreek Financial go up and down completely randomly.
Pair Corralation between Canadian Imperial and Timbercreek Financial
Assuming the 90 days horizon Canadian Imperial Bank is expected to under-perform the Timbercreek Financial. In addition to that, Canadian Imperial is 1.1 times more volatile than Timbercreek Financial Corp. It trades about -0.27 of its total potential returns per unit of risk. Timbercreek Financial Corp is currently generating about -0.12 per unit of volatility. If you would invest 708.00 in Timbercreek Financial Corp on November 29, 2024 and sell it today you would lose (19.00) from holding Timbercreek Financial Corp or give up 2.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. Timbercreek Financial Corp
Performance |
| Timeline |
| Canadian Imperial Bank |
| Timbercreek Financial |
Canadian Imperial and Timbercreek Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Timbercreek Financial
The main advantage of trading using opposite Canadian Imperial and Timbercreek Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Timbercreek Financial 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 Timbercreek Financial will offset losses from the drop in Timbercreek Financial'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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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