Correlation Between Canadian Imperial and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Ally 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 Ally 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 Ally Financial, you can compare the effects of market volatilities on Canadian Imperial and Ally 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 Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Ally Financial.
Diversification Opportunities for Canadian Imperial and Ally Financial
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Canadian and Ally is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally 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 Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Ally Financial go up and down completely randomly.
Pair Corralation between Canadian Imperial and Ally Financial
Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to generate 0.38 times more return on investment than Ally Financial. However, Canadian Imperial Bank is 2.62 times less risky than Ally Financial. It trades about 0.28 of its potential returns per unit of risk. Ally Financial is currently generating about -0.07 per unit of risk. If you would invest 5,384 in Canadian Imperial Bank on August 23, 2024 and sell it today you would earn a total of 1,137 from holding Canadian Imperial Bank or generate 21.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. Ally Financial
Performance |
| Timeline |
| Canadian Imperial Bank |
| Ally Financial |
Canadian Imperial and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Ally Financial
The main advantage of trading using opposite Canadian Imperial and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Ally 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 Ally Financial will offset losses from the drop in Ally Financial's long position.| Canadian Imperial vs. Bank of Montreal | Canadian Imperial vs. Toronto Dominion Bank | Canadian Imperial vs. Royal Bank of | Canadian Imperial vs. Citigroup |
| Ally Financial vs. Small Cap Core | Ally Financial vs. Morningstar Unconstrained Allocation | Ally Financial vs. Mutual Of America | Ally Financial vs. Ep Emerging Markets |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |