Correlation Between CI Global and Tech Leaders
Can any of the company-specific risk be diversified away by investing in both CI Global and Tech Leaders 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 Global and Tech Leaders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Global Financial and Tech Leaders Income, you can compare the effects of market volatilities on CI Global and Tech Leaders 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 Global with a short position of Tech Leaders. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Global and Tech Leaders.
Diversification Opportunities for CI Global and Tech Leaders
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FSF and Tech is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Financial and Tech Leaders Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tech Leaders Income and CI Global 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 Global Financial are associated (or correlated) with Tech Leaders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tech Leaders Income has no effect on the direction of CI Global i.e., CI Global and Tech Leaders go up and down completely randomly.
Pair Corralation between CI Global and Tech Leaders
Assuming the 90 days trading horizon CI Global is expected to generate 1.46 times less return on investment than Tech Leaders. But when comparing it to its historical volatility, CI Global Financial is 1.31 times less risky than Tech Leaders. It trades about 0.09 of its potential returns per unit of risk. Tech Leaders Income is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,461 in Tech Leaders Income on August 29, 2024 and sell it today you would earn a total of 1,081 from holding Tech Leaders Income or generate 73.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Global Financial vs. Tech Leaders Income
Performance |
| Timeline |
| CI Global Financial |
| Tech Leaders Income |
CI Global and Tech Leaders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Global and Tech Leaders
The main advantage of trading using opposite CI Global and Tech Leaders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Global position performs unexpectedly, Tech Leaders 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 Tech Leaders will offset losses from the drop in Tech Leaders' long position.| CI Global vs. Brompton Global Dividend | CI Global vs. Tech Leaders Income | CI Global vs. Global Healthcare Income | CI Global vs. Brompton European Dividend |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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