Correlation Between Energy Leaders and CI Preferred
Can any of the company-specific risk be diversified away by investing in both Energy Leaders and CI Preferred 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 Energy Leaders and CI Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Leaders Plus and CI Preferred Share, you can compare the effects of market volatilities on Energy Leaders and CI Preferred 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 Energy Leaders with a short position of CI Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Leaders and CI Preferred.
Diversification Opportunities for Energy Leaders and CI Preferred
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and FPR is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Energy Leaders Plus and CI Preferred Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Preferred Share and Energy Leaders 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 Energy Leaders Plus are associated (or correlated) with CI Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Preferred Share has no effect on the direction of Energy Leaders i.e., Energy Leaders and CI Preferred go up and down completely randomly.
Pair Corralation between Energy Leaders and CI Preferred
Assuming the 90 days trading horizon Energy Leaders Plus is expected to under-perform the CI Preferred. In addition to that, Energy Leaders is 2.39 times more volatile than CI Preferred Share. It trades about -0.02 of its total potential returns per unit of risk. CI Preferred Share is currently generating about 0.18 per unit of volatility. If you would invest 1,909 in CI Preferred Share on September 20, 2024 and sell it today you would earn a total of 393.00 from holding CI Preferred Share or generate 20.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Energy Leaders Plus vs. CI Preferred Share
Performance |
| Timeline |
| Energy Leaders Plus |
| CI Preferred Share |
Energy Leaders and CI Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Leaders and CI Preferred
The main advantage of trading using opposite Energy Leaders and CI Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Leaders position performs unexpectedly, CI Preferred 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 Preferred will offset losses from the drop in CI Preferred's long position.| Energy Leaders vs. Harvest Brand Leaders | Energy Leaders vs. Harvest Equal Weight | Energy Leaders vs. First Asset Energy | Energy Leaders vs. Harvest Healthcare Leaders |
| CI Preferred vs. iShares 1 5 Year | CI Preferred vs. iShares 1 5 Year | CI Preferred vs. iShares Core Canadian | CI Preferred vs. iShares Global Monthly |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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