Correlation Between Financial and CI Financial
Can any of the company-specific risk be diversified away by investing in both Financial and CI Financial 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 Financial and CI Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and CI Financial Corp, you can compare the effects of market volatilities on Financial and CI Financial 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 Financial with a short position of CI Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and CI Financial.
Diversification Opportunities for Financial and CI Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Financial and CIX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial Corp and Financial 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 Financial 15 Split are associated (or correlated) with CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of Financial i.e., Financial and CI Financial go up and down completely randomly.
Pair Corralation between Financial and CI Financial
Assuming the 90 days trading horizon Financial is expected to generate 12.45 times less return on investment than CI Financial. But when comparing it to its historical volatility, Financial 15 Split is 17.54 times less risky than CI Financial. It trades about 0.39 of its potential returns per unit of risk. CI Financial Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,219 in CI Financial Corp on August 28, 2024 and sell it today you would earn a total of 903.00 from holding CI Financial Corp or generate 40.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial 15 Split vs. CI Financial Corp
Performance |
| Timeline |
| Financial 15 Split |
| CI Financial Corp |
Financial and CI Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and CI Financial
The main advantage of trading using opposite Financial and CI Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial position performs unexpectedly, CI Financial 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 Financial will offset losses from the drop in CI Financial's long position.| Financial vs. North American Financial | Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split |
| CI Financial vs. IGM Financial | CI Financial vs. iA Financial | CI Financial vs. Canadian Western Bank | CI Financial vs. Great West Lifeco |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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