Correlation Between Dow Jones and CI Canadian
Can any of the company-specific risk be diversified away by investing in both Dow Jones and CI Canadian 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 Dow Jones and CI Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and CI Canadian Banks, you can compare the effects of market volatilities on Dow Jones and CI Canadian 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 Dow Jones with a short position of CI Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and CI Canadian.
Diversification Opportunities for Dow Jones and CI Canadian
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and CIC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and CI Canadian Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canadian Banks and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with CI Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canadian Banks has no effect on the direction of Dow Jones i.e., Dow Jones and CI Canadian go up and down completely randomly.
Pair Corralation between Dow Jones and CI Canadian
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.47 times less return on investment than CI Canadian. In addition to that, Dow Jones is 1.31 times more volatile than CI Canadian Banks. It trades about 0.08 of its total potential returns per unit of risk. CI Canadian Banks is currently generating about 0.16 per unit of volatility. If you would invest 992.00 in CI Canadian Banks on October 25, 2024 and sell it today you would earn a total of 236.00 from holding CI Canadian Banks or generate 23.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. CI Canadian Banks
Performance |
| Timeline |
Dow Jones and CI Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
CI Canadian Banks
Pair trading matchups for CI Canadian
Pair Trading with Dow Jones and CI Canadian
The main advantage of trading using opposite Dow Jones and CI Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, CI Canadian 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 CI Canadian will offset losses from the drop in CI Canadian's long position.| Dow Jones vs. Xiabuxiabu Catering Management | Dow Jones vs. Neogen | Dow Jones vs. Orion Office Reit | Dow Jones vs. Bassett Furniture Industries |
| CI Canadian vs. Celestica | CI Canadian vs. Descartes Systems Group | CI Canadian vs. Hamilton Mid Cap Financials | CI Canadian vs. CI Canada Lifeco |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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