Correlation Between CI Preferred and Dynamic Active
Can any of the company-specific risk be diversified away by investing in both CI Preferred and Dynamic Active 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 Preferred and Dynamic Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Preferred Share and Dynamic Active Preferred, you can compare the effects of market volatilities on CI Preferred and Dynamic Active 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 Preferred with a short position of Dynamic Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Preferred and Dynamic Active.
Diversification Opportunities for CI Preferred and Dynamic Active
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FPR and Dynamic is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CI Preferred Share and Dynamic Active Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Preferred and CI Preferred 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 Preferred Share are associated (or correlated) with Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Preferred has no effect on the direction of CI Preferred i.e., CI Preferred and Dynamic Active go up and down completely randomly.
Pair Corralation between CI Preferred and Dynamic Active
Assuming the 90 days trading horizon CI Preferred is expected to generate 3.86 times less return on investment than Dynamic Active. In addition to that, CI Preferred is 1.81 times more volatile than Dynamic Active Preferred. It trades about 0.06 of its total potential returns per unit of risk. Dynamic Active Preferred is currently generating about 0.42 per unit of volatility. If you would invest 2,203 in Dynamic Active Preferred on September 1, 2024 and sell it today you would earn a total of 53.00 from holding Dynamic Active Preferred or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CI Preferred Share vs. Dynamic Active Preferred
Performance |
| Timeline |
| CI Preferred Share |
| Dynamic Active Preferred |
CI Preferred and Dynamic Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Preferred and Dynamic Active
The main advantage of trading using opposite CI Preferred and Dynamic Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Preferred position performs unexpectedly, Dynamic Active 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 Dynamic Active will offset losses from the drop in Dynamic Active's long position.| CI Preferred vs. BMO Covered Call | CI Preferred vs. Forstrong Global Income | CI Preferred vs. BMO Aggregate Bond | CI Preferred vs. iShares Canadian HYBrid |
| Dynamic Active vs. BMO Covered Call | Dynamic Active vs. Forstrong Global Income | Dynamic Active vs. BMO Aggregate Bond | Dynamic Active vs. iShares Canadian HYBrid |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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