Correlation Between Global X and CIBC Core
Can any of the company-specific risk be diversified away by investing in both Global X and CIBC Core 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 Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X 7 10 and CIBC Core Plus, you can compare the effects of market volatilities on Global X and CIBC Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and CIBC Core.
Diversification Opportunities for Global X and CIBC Core
Modest diversification
The 3 months correlation between Global and CIBC is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global X 7 10 and CIBC Core Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Core Plus 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 7 10 are associated (or correlated) with CIBC Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Core Plus has no effect on the direction of Global X i.e., Global X and CIBC Core go up and down completely randomly.
Pair Corralation between Global X and CIBC Core
Assuming the 90 days trading horizon Global X is expected to generate 12.61 times less return on investment than CIBC Core. But when comparing it to its historical volatility, Global X 7 10 is 10.85 times less risky than CIBC Core. It trades about 0.02 of its potential returns per unit of risk. CIBC Core Plus is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,616 in CIBC Core Plus on August 28, 2024 and sell it today you would earn a total of 169.00 from holding CIBC Core Plus or generate 10.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Global X 7 10 vs. CIBC Core Plus
Performance |
| Timeline |
| Global X 7 |
| CIBC Core Plus |
Global X and CIBC Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and CIBC Core
The main advantage of trading using opposite Global X and CIBC Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, CIBC Core 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 Core will offset losses from the drop in CIBC Core's long position.The idea behind Global X 7 10 and CIBC Core Plus pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CIBC Core vs. CIBC Core Fixed | CIBC Core vs. CIBC Canadian Equity | CIBC Core vs. CIBC Clean Energy | CIBC Core vs. CIBC Conservative Fixed |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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