Correlation Between First Asset and CI Canada
Can any of the company-specific risk be diversified away by investing in both First Asset and CI Canada 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 First Asset and CI Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Asset Energy and CI Canada Lifeco, you can compare the effects of market volatilities on First Asset and CI Canada 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 First Asset with a short position of CI Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and CI Canada.
Diversification Opportunities for First Asset and CI Canada
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and FLI is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Energy and CI Canada Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canada Lifeco and First Asset 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 First Asset Energy are associated (or correlated) with CI Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canada Lifeco has no effect on the direction of First Asset i.e., First Asset and CI Canada go up and down completely randomly.
Pair Corralation between First Asset and CI Canada
Assuming the 90 days trading horizon First Asset is expected to generate 3.2 times less return on investment than CI Canada. But when comparing it to its historical volatility, First Asset Energy is 1.81 times less risky than CI Canada. It trades about 0.12 of its potential returns per unit of risk. CI Canada Lifeco is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,116 in CI Canada Lifeco on August 30, 2024 and sell it today you would earn a total of 81.00 from holding CI Canada Lifeco or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Asset Energy vs. CI Canada Lifeco
Performance |
| Timeline |
| First Asset Energy |
| CI Canada Lifeco |
First Asset and CI Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Asset and CI Canada
The main advantage of trading using opposite First Asset and CI Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Asset position performs unexpectedly, CI Canada 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 Canada will offset losses from the drop in CI Canada's long position.| First Asset vs. CI Gold Giants | First Asset vs. First Asset Tech | First Asset vs. CI Canada Lifeco | First Asset vs. Harvest Healthcare Leaders |
| CI Canada vs. First Asset Energy | CI Canada vs. CI Gold Giants | CI Canada vs. Harvest Equal Weight | CI Canada vs. First Asset Tech |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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