Correlation Between ECN Capital and CI Financial
Can any of the company-specific risk be diversified away by investing in both ECN Capital and CI Financial 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 ECN Capital and CI Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECN Capital Corp and CI Financial Corp, you can compare the effects of market volatilities on ECN Capital and CI Financial 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 ECN Capital with a short position of CI Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECN Capital and CI Financial.
Diversification Opportunities for ECN Capital and CI Financial
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ECN and CIX is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ECN Capital Corp and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial Corp and ECN Capital 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 ECN Capital Corp are associated (or correlated) with CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of ECN Capital i.e., ECN Capital and CI Financial go up and down completely randomly.
Pair Corralation between ECN Capital and CI Financial
Assuming the 90 days trading horizon ECN Capital is expected to generate 2.46 times less return on investment than CI Financial. In addition to that, ECN Capital is 1.46 times more volatile than CI Financial Corp. It trades about 0.02 of its total potential returns per unit of risk. CI Financial Corp is currently generating about 0.09 per unit of volatility. If you would invest 1,295 in CI Financial Corp on August 28, 2024 and sell it today you would earn a total of 1,827 from holding CI Financial Corp or generate 141.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECN Capital Corp vs. CI Financial Corp
Performance |
| Timeline |
| ECN Capital Corp |
| CI Financial Corp |
ECN Capital and CI Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECN Capital and CI Financial
The main advantage of trading using opposite ECN Capital and CI Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECN Capital position performs unexpectedly, CI Financial 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 Financial will offset losses from the drop in CI Financial's long position.| ECN Capital vs. Element Fleet Management | ECN Capital vs. Colliers International Group | ECN Capital vs. Altus Group Limited | ECN Capital vs. FirstService Corp |
| CI Financial vs. IGM Financial | CI Financial vs. iA Financial | CI Financial vs. Canadian Western Bank | CI Financial vs. Great West 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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