Correlation Between CI ONE and CI Preferred
Can any of the company-specific risk be diversified away by investing in both CI ONE and CI Preferred 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 CI ONE and CI Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI ONE North and CI Preferred Share, you can compare the effects of market volatilities on CI ONE and CI Preferred 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 CI ONE with a short position of CI Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI ONE and CI Preferred.
Diversification Opportunities for CI ONE and CI Preferred
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ONEB and FPR is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CI ONE North and CI Preferred Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Preferred Share and CI ONE 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 CI ONE North are associated (or correlated) with CI Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Preferred Share has no effect on the direction of CI ONE i.e., CI ONE and CI Preferred go up and down completely randomly.
Pair Corralation between CI ONE and CI Preferred
Assuming the 90 days trading horizon CI ONE is expected to generate 3.11 times less return on investment than CI Preferred. But when comparing it to its historical volatility, CI ONE North is 2.19 times less risky than CI Preferred. It trades about 0.13 of its potential returns per unit of risk. CI Preferred Share is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,886 in CI Preferred Share on September 14, 2024 and sell it today you would earn a total of 403.00 from holding CI Preferred Share or generate 21.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI ONE North vs. CI Preferred Share
Performance |
| Timeline |
| CI ONE North |
| CI Preferred Share |
CI ONE and CI Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI ONE and CI Preferred
The main advantage of trading using opposite CI ONE and CI Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI ONE position performs unexpectedly, CI Preferred 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 Preferred will offset losses from the drop in CI Preferred's long position.| CI ONE vs. CI ONE Global | CI ONE vs. CI Yield Enhanced | CI ONE vs. CI MidCap Dividend | CI ONE vs. CI Canadian Short Term |
| CI Preferred vs. iShares 1 5 Year | CI Preferred vs. iShares 1 5 Year | CI Preferred vs. iShares Core Canadian | CI Preferred vs. iShares Global Monthly |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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