Correlation Between First Trust and CIBC Active
Can any of the company-specific risk be diversified away by investing in both First Trust and CIBC 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 First Trust and CIBC Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and CIBC Active Investment, you can compare the effects of market volatilities on First Trust and CIBC 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 First Trust with a short position of CIBC Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and CIBC Active.
Diversification Opportunities for First Trust and CIBC Active
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and CIBC is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and CIBC Active Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Active Investment 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 Senior are associated (or correlated) with CIBC Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Active Investment has no effect on the direction of First Trust i.e., First Trust and CIBC Active go up and down completely randomly.
Pair Corralation between First Trust and CIBC Active
Assuming the 90 days trading horizon First Trust Senior is expected to generate 1.09 times more return on investment than CIBC Active. However, First Trust is 1.09 times more volatile than CIBC Active Investment. It trades about 0.08 of its potential returns per unit of risk. CIBC Active Investment is currently generating about 0.08 per unit of risk. If you would invest 1,608 in First Trust Senior on August 28, 2024 and sell it today you would earn a total of 98.00 from holding First Trust Senior or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. CIBC Active Investment
Performance |
| Timeline |
| First Trust Senior |
| CIBC Active Investment |
First Trust and CIBC Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and CIBC Active
The main advantage of trading using opposite First Trust and CIBC Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, CIBC 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 CIBC Active will offset losses from the drop in CIBC Active's long position.| First Trust vs. First Trust Global | First Trust vs. First Trust Value | First Trust vs. Global X Active | First Trust vs. BMO Floating Rate |
| CIBC Active vs. CIBC Active Investment | CIBC Active vs. CIBC Flexible Yield | CIBC Active vs. Global X Active | CIBC Active vs. Brompton Flaherty Crumrine |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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