Correlation Between NYSE Composite and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Canadian Imperial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Canadian Imperial Bank, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Canadian Imperial.
Diversification Opportunities for NYSE Composite and Canadian Imperial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Canadian is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Canadian Imperial go up and down completely randomly.
Pair Corralation between NYSE Composite and Canadian Imperial
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.18 times less return on investment than Canadian Imperial. But when comparing it to its historical volatility, NYSE Composite is 1.73 times less risky than Canadian Imperial. It trades about 0.07 of its potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,937 in Canadian Imperial Bank on August 23, 2024 and sell it today you would earn a total of 2,584 from holding Canadian Imperial Bank or generate 65.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Canadian Imperial Bank
Performance |
| Timeline |
NYSE Composite and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Canadian Imperial Bank
Pair trading matchups for Canadian Imperial
Pair Trading with NYSE Composite and Canadian Imperial
The main advantage of trading using opposite NYSE Composite and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Akanda Corp | NYSE Composite vs. Valneva SE ADR | NYSE Composite vs. Radcom | NYSE Composite vs. Western Digital |
| Canadian Imperial vs. Bank of Montreal | Canadian Imperial vs. Toronto Dominion Bank | Canadian Imperial vs. Royal Bank of | Canadian Imperial vs. Citigroup |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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