Correlation Between Information Services and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both Information Services and Canadian Imperial 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 Information Services and Canadian Imperial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services and Canadian Imperial Bank, you can compare the effects of market volatilities on Information Services and Canadian Imperial 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 Information Services with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and Canadian Imperial.
Diversification Opportunities for Information Services and Canadian Imperial
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Information and Canadian is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Information Services and Canadian Imperial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank and Information Services 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 Information Services are associated (or correlated) with Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of Information Services i.e., Information Services and Canadian Imperial go up and down completely randomly.
Pair Corralation between Information Services and Canadian Imperial
Assuming the 90 days trading horizon Information Services is expected to generate 2.88 times more return on investment than Canadian Imperial. However, Information Services is 2.88 times more volatile than Canadian Imperial Bank. It trades about 0.12 of its potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.04 per unit of risk. If you would invest 2,701 in Information Services on October 14, 2024 and sell it today you would earn a total of 69.00 from holding Information Services or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Services vs. Canadian Imperial Bank
Performance |
| Timeline |
| Information Services |
| Canadian Imperial Bank |
Information Services and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Services and Canadian Imperial
The main advantage of trading using opposite Information Services and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services position performs unexpectedly, Canadian Imperial 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 Canadian Imperial will offset losses from the drop in Canadian Imperial's long position.| Information Services vs. Orbit Garant Drilling | Information Services vs. Maple Leaf Foods | Information Services vs. AGF Management Limited | Information Services vs. Major Drilling Group |
| Canadian Imperial vs. Plaza Retail REIT | Canadian Imperial vs. Summa Silver Corp | Canadian Imperial vs. Medical Facilities | Canadian Imperial vs. Information Services |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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