Correlation Between Global X and CIBC Conservative
Can any of the company-specific risk be diversified away by investing in both Global X and CIBC Conservative 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 Global X and CIBC Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Canadian and CIBC Conservative Fixed, you can compare the effects of market volatilities on Global X and CIBC Conservative 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 Global X with a short position of CIBC Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and CIBC Conservative.
Diversification Opportunities for Global X and CIBC Conservative
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and CIBC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Global X Canadian and CIBC Conservative Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Conservative Fixed and Global X 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 Global X Canadian are associated (or correlated) with CIBC Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Conservative Fixed has no effect on the direction of Global X i.e., Global X and CIBC Conservative go up and down completely randomly.
Pair Corralation between Global X and CIBC Conservative
Assuming the 90 days trading horizon Global X Canadian is expected to generate 2.08 times more return on investment than CIBC Conservative. However, Global X is 2.08 times more volatile than CIBC Conservative Fixed. It trades about 0.13 of its potential returns per unit of risk. CIBC Conservative Fixed is currently generating about 0.13 per unit of risk. If you would invest 4,899 in Global X Canadian on November 3, 2024 and sell it today you would earn a total of 57.00 from holding Global X Canadian or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Canadian vs. CIBC Conservative Fixed
Performance |
| Timeline |
| Global X Canadian |
| CIBC Conservative Fixed |
Global X and CIBC Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and CIBC Conservative
The main advantage of trading using opposite Global X and CIBC Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, CIBC Conservative 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 Conservative will offset losses from the drop in CIBC Conservative's long position.| Global X vs. Global X Intl | Global X vs. Global X SP | Global X vs. BMO Discount Bond | Global X vs. Global X 7 10 |
| CIBC Conservative vs. CIBC Core Fixed | CIBC Conservative vs. CIBC Canadian Equity | CIBC Conservative vs. CIBC Clean Energy | CIBC Conservative vs. CIBC Qx Low |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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