Correlation Between CIBC Qx and CIBC Clean
Can any of the company-specific risk be diversified away by investing in both CIBC Qx and CIBC Clean 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 CIBC Qx and CIBC Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIBC Qx Low and CIBC Clean Energy, you can compare the effects of market volatilities on CIBC Qx and CIBC Clean 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 CIBC Qx with a short position of CIBC Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIBC Qx and CIBC Clean.
Diversification Opportunities for CIBC Qx and CIBC Clean
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CIBC and CIBC is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Qx Low and CIBC Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Clean Energy and CIBC Qx 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 CIBC Qx Low are associated (or correlated) with CIBC Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Clean Energy has no effect on the direction of CIBC Qx i.e., CIBC Qx and CIBC Clean go up and down completely randomly.
Pair Corralation between CIBC Qx and CIBC Clean
Assuming the 90 days trading horizon CIBC Qx Low is expected to generate 0.49 times more return on investment than CIBC Clean. However, CIBC Qx Low is 2.02 times less risky than CIBC Clean. It trades about 0.29 of its potential returns per unit of risk. CIBC Clean Energy is currently generating about -0.16 per unit of risk. If you would invest 1,963 in CIBC Qx Low on November 27, 2024 and sell it today you would earn a total of 78.00 from holding CIBC Qx Low or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CIBC Qx Low vs. CIBC Clean Energy
Performance |
| Timeline |
| CIBC Qx Low |
| CIBC Clean Energy |
CIBC Qx and CIBC Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIBC Qx and CIBC Clean
The main advantage of trading using opposite CIBC Qx and CIBC Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIBC Qx position performs unexpectedly, CIBC Clean 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 CIBC Clean will offset losses from the drop in CIBC Clean's long position.| CIBC Qx vs. CIBC Core Fixed | CIBC Qx vs. CIBC Canadian Equity | CIBC Qx vs. CIBC Clean Energy | CIBC Qx vs. CIBC Conservative Fixed |
| CIBC Clean vs. CIBC Core Fixed | CIBC Clean vs. CIBC Canadian Equity | CIBC Clean vs. CIBC Conservative Fixed | CIBC Clean vs. CIBC Qx Low |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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