Correlation Between Global X and CIBC Canadian
Can any of the company-specific risk be diversified away by investing in both Global X and CIBC Canadian 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 Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Natural and CIBC Canadian Equity, you can compare the effects of market volatilities on Global X and CIBC Canadian 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 Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and CIBC Canadian.
Diversification Opportunities for Global X and CIBC Canadian
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and CIBC is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Global X Natural and CIBC Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Canadian Equity 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 Natural are associated (or correlated) with CIBC Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Canadian Equity has no effect on the direction of Global X i.e., Global X and CIBC Canadian go up and down completely randomly.
Pair Corralation between Global X and CIBC Canadian
Assuming the 90 days trading horizon Global X Natural is expected to under-perform the CIBC Canadian. In addition to that, Global X is 3.05 times more volatile than CIBC Canadian Equity. It trades about -0.04 of its total potential returns per unit of risk. CIBC Canadian Equity is currently generating about 0.21 per unit of volatility. If you would invest 2,357 in CIBC Canadian Equity on September 1, 2024 and sell it today you would earn a total of 422.00 from holding CIBC Canadian Equity or generate 17.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Global X Natural vs. CIBC Canadian Equity
Performance |
| Timeline |
| Global X Natural |
| CIBC Canadian Equity |
Global X and CIBC Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and CIBC Canadian
The main advantage of trading using opposite Global X and CIBC Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, CIBC Canadian 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 Canadian will offset losses from the drop in CIBC Canadian's long position.| Global X vs. Global X Crude | Global X vs. Global X Silver | Global X vs. Global X Gold | Global X vs. Global X Active |
| CIBC Canadian vs. iShares SPTSX 60 | CIBC Canadian vs. iShares Core SPTSX | CIBC Canadian vs. Vanguard FTSE Canada | CIBC Canadian vs. Global X SPTSX |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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