Correlation Between CI Canada and Scotia International

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Can any of the company-specific risk be diversified away by investing in both CI Canada and Scotia 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 CI Canada and Scotia International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Canada Lifeco and Scotia International Equity, you can compare the effects of market volatilities on CI Canada and Scotia 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 CI Canada with a short position of Scotia International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Canada and Scotia International.

Diversification Opportunities for CI Canada and Scotia International

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between FLI and Scotia is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CI Canada Lifeco and Scotia International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scotia International and CI Canada 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 CI Canada Lifeco are associated (or correlated) with Scotia International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scotia International has no effect on the direction of CI Canada i.e., CI Canada and Scotia International go up and down completely randomly.

Pair Corralation between CI Canada and Scotia International

Assuming the 90 days trading horizon CI Canada Lifeco is expected to generate 1.74 times more return on investment than Scotia International. However, CI Canada is 1.74 times more volatile than Scotia International Equity. It trades about 0.06 of its potential returns per unit of risk. Scotia International Equity is currently generating about 0.09 per unit of risk. If you would invest  871.00  in CI Canada Lifeco on September 10, 2024 and sell it today you would earn a total of  300.00  from holding CI Canada Lifeco or generate 34.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CI Canada Lifeco  vs.  Scotia International Equity

 Performance 
       Timeline  
CI Canada Lifeco 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CI Canada Lifeco are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, CI Canada may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Scotia International 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Scotia International Equity are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Scotia International is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CI Canada and Scotia International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CI Canada and Scotia International

The main advantage of trading using opposite CI Canada and Scotia International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Canada position performs unexpectedly, Scotia 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 Scotia International will offset losses from the drop in Scotia International's long position.
The idea behind CI Canada Lifeco and Scotia International Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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