Correlation Between CIBC Qx and CIBC Core
Can any of the company-specific risk be diversified away by investing in both CIBC Qx and CIBC Core 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 Core 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 Core Fixed, you can compare the effects of market volatilities on CIBC Qx and CIBC Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIBC Qx and CIBC Core.
Diversification Opportunities for CIBC Qx and CIBC Core
Modest diversification
The 3 months correlation between CIBC and CIBC is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Qx Low and CIBC Core Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Core Fixed 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Core Fixed has no effect on the direction of CIBC Qx i.e., CIBC Qx and CIBC Core go up and down completely randomly.
Pair Corralation between CIBC Qx and CIBC Core
Assuming the 90 days trading horizon CIBC Qx Low is expected to generate 1.58 times more return on investment than CIBC Core. However, CIBC Qx is 1.58 times more volatile than CIBC Core Fixed. It trades about 0.19 of its potential returns per unit of risk. CIBC Core Fixed is currently generating about 0.14 per unit of risk. If you would invest 2,376 in CIBC Qx Low on August 29, 2024 and sell it today you would earn a total of 57.00 from holding CIBC Qx Low or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CIBC Qx Low vs. CIBC Core Fixed
Performance |
| Timeline |
| CIBC Qx Low |
| CIBC Core Fixed |
CIBC Qx and CIBC Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIBC Qx and CIBC Core
The main advantage of trading using opposite CIBC Qx and CIBC Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIBC Qx position performs unexpectedly, CIBC Core 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 Core will offset losses from the drop in CIBC Core's long position.| CIBC Qx vs. iShares SPTSX 60 | CIBC Qx vs. iShares Core SP | CIBC Qx vs. iShares Core SPTSX | CIBC Qx vs. BMO Aggregate Bond |
| CIBC Core vs. CIBC Canadian Equity | CIBC Core vs. CIBC Clean Energy | CIBC Core vs. CIBC Conservative Fixed | CIBC Core 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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