Correlation Between United Breweries and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both United Breweries and CDN IMPERIAL 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 United Breweries and CDN IMPERIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and CDN IMPERIAL BANK, you can compare the effects of market volatilities on United Breweries and CDN IMPERIAL 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 United Breweries with a short position of CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and CDN IMPERIAL.
Diversification Opportunities for United Breweries and CDN IMPERIAL
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and CDN is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK and United Breweries 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 United Breweries Co are associated (or correlated) with CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of United Breweries i.e., United Breweries and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between United Breweries and CDN IMPERIAL
Assuming the 90 days trading horizon United Breweries is expected to generate 2.7 times less return on investment than CDN IMPERIAL. In addition to that, United Breweries is 2.06 times more volatile than CDN IMPERIAL BANK. It trades about 0.04 of its total potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.24 per unit of volatility. If you would invest 5,855 in CDN IMPERIAL BANK on August 29, 2024 and sell it today you would earn a total of 288.00 from holding CDN IMPERIAL BANK or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| United Breweries |
| CDN IMPERIAL BANK |
United Breweries and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and CDN IMPERIAL
The main advantage of trading using opposite United Breweries and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc |
| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Superior Plus Corp | CDN IMPERIAL vs. SIVERS SEMICONDUCTORS AB |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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