Correlation Between First Trust and CIBC International
Can any of the company-specific risk be diversified away by investing in both First Trust and CIBC International 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 First Trust and CIBC International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Indxx and CIBC International Equity, you can compare the effects of market volatilities on First Trust and CIBC International 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 First Trust with a short position of CIBC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and CIBC International.
Diversification Opportunities for First Trust and CIBC International
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and CIBC is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and CIBC International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC International Equity and First Trust 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 First Trust Indxx are associated (or correlated) with CIBC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC International Equity has no effect on the direction of First Trust i.e., First Trust and CIBC International go up and down completely randomly.
Pair Corralation between First Trust and CIBC International
Assuming the 90 days trading horizon First Trust Indxx is expected to generate 2.25 times more return on investment than CIBC International. However, First Trust is 2.25 times more volatile than CIBC International Equity. It trades about 0.17 of its potential returns per unit of risk. CIBC International Equity is currently generating about -0.34 per unit of risk. If you would invest 1,153 in First Trust Indxx on October 9, 2024 and sell it today you would earn a total of 45.00 from holding First Trust Indxx or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Indxx vs. CIBC International Equity
Performance |
| Timeline |
| First Trust Indxx |
| CIBC International Equity |
First Trust and CIBC International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and CIBC International
The main advantage of trading using opposite First Trust and CIBC International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, CIBC International 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 International will offset losses from the drop in CIBC International's long position.| First Trust vs. First Trust Indxx | First Trust vs. First Trust Senior | First Trust vs. First Trust AlphaDEX | First Trust vs. First Trust Indxx |
| CIBC International vs. CIBC Global Growth | CIBC International vs. CIBC Flexible Yield | CIBC International vs. CIBC Active Investment | CIBC International vs. CIBC Conservative Fixed |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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