Correlation Between CI Preferred and CI Short
Can any of the company-specific risk be diversified away by investing in both CI Preferred and CI Short 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 CI Short 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 CI Short Term, you can compare the effects of market volatilities on CI Preferred and CI Short 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 CI Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Preferred and CI Short.
Diversification Opportunities for CI Preferred and CI Short
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FPR and FGB is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CI Preferred Share and CI Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Short Term 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 CI Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Short Term has no effect on the direction of CI Preferred i.e., CI Preferred and CI Short go up and down completely randomly.
Pair Corralation between CI Preferred and CI Short
Assuming the 90 days trading horizon CI Preferred Share is expected to under-perform the CI Short. In addition to that, CI Preferred is 1.98 times more volatile than CI Short Term. It trades about -0.08 of its total potential returns per unit of risk. CI Short Term is currently generating about 0.16 per unit of volatility. If you would invest 1,845 in CI Short Term on November 27, 2024 and sell it today you would earn a total of 10.00 from holding CI Short Term or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Preferred Share vs. CI Short Term
Performance |
| Timeline |
| CI Preferred Share |
| CI Short Term |
CI Preferred and CI Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Preferred and CI Short
The main advantage of trading using opposite CI Preferred and CI Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Preferred position performs unexpectedly, CI Short 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 Short will offset losses from the drop in CI Short's long position.| CI Preferred vs. Dynamic Active Preferred | CI Preferred vs. CI Global Financial | CI Preferred vs. CI Enhanced Short | CI Preferred vs. First Asset Morningstar |
| CI Short vs. CI Enhanced Short | CI Short vs. CI Preferred Share | CI Short vs. CI Global Financial | CI Short vs. CI Investment Grade |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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