Correlation Between Power and CI Financial
Can any of the company-specific risk be diversified away by investing in both Power and CI Financial 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 Power and CI Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power and CI Financial Corp, you can compare the effects of market volatilities on Power and CI Financial 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 Power with a short position of CI Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power and CI Financial.
Diversification Opportunities for Power and CI Financial
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Power and CIX is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Power and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial Corp and Power 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 Power are associated (or correlated) with CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of Power i.e., Power and CI Financial go up and down completely randomly.
Pair Corralation between Power and CI Financial
Assuming the 90 days trading horizon Power is expected to generate 3.91 times less return on investment than CI Financial. But when comparing it to its historical volatility, Power is 2.81 times less risky than CI Financial. It trades about 0.16 of its potential returns per unit of risk. CI Financial Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,424 in CI Financial Corp on September 1, 2024 and sell it today you would earn a total of 1,681 from holding CI Financial Corp or generate 118.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power vs. CI Financial Corp
Performance |
| Timeline |
| Power |
| CI Financial Corp |
Power and CI Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power and CI Financial
The main advantage of trading using opposite Power and CI Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power position performs unexpectedly, CI Financial 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 Financial will offset losses from the drop in CI Financial's long position.| Power vs. Great West Lifeco | Power vs. Manulife Financial Corp | Power vs. Sun Life Financial | Power vs. Fortis Inc |
| CI Financial vs. IGM Financial | CI Financial vs. iA Financial | CI Financial vs. Canadian Western Bank | CI Financial vs. Great West Lifeco |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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