Correlation Between Canadian Imperial and UBS Group
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and UBS Group 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 UBS Group 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 UBS Group AG, you can compare the effects of market volatilities on Canadian Imperial and UBS Group 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 UBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and UBS Group.
Diversification Opportunities for Canadian Imperial and UBS Group
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canadian and UBS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG 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 UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and UBS Group go up and down completely randomly.
Pair Corralation between Canadian Imperial and UBS Group
Allowing for the 90-day total investment horizon Canadian Imperial is expected to generate 3.02 times less return on investment than UBS Group. But when comparing it to its historical volatility, Canadian Imperial Bank is 2.35 times less risky than UBS Group. It trades about 0.1 of its potential returns per unit of risk. UBS Group AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,101 in UBS Group AG on September 4, 2024 and sell it today you would earn a total of 127.00 from holding UBS Group AG or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. UBS Group AG
Performance |
| Timeline |
| Canadian Imperial Bank |
| UBS Group AG |
Canadian Imperial and UBS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and UBS Group
The main advantage of trading using opposite Canadian Imperial and UBS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, UBS Group 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 UBS Group will offset losses from the drop in UBS Group'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 |
| UBS Group vs. Citigroup | UBS Group vs. Barclays PLC ADR | UBS Group vs. HSBC Holdings PLC | UBS Group vs. Nu Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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