Correlation Between CI Canadian and Energy Income
Can any of the company-specific risk be diversified away by investing in both CI Canadian and Energy Income 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 Canadian and Energy Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Canadian REIT and Energy Income, you can compare the effects of market volatilities on CI Canadian and Energy Income 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 Canadian with a short position of Energy Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Canadian and Energy Income.
Diversification Opportunities for CI Canadian and Energy Income
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RIT and Energy is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding CI Canadian REIT and Energy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Income and CI Canadian 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 Canadian REIT are associated (or correlated) with Energy Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Income has no effect on the direction of CI Canadian i.e., CI Canadian and Energy Income go up and down completely randomly.
Pair Corralation between CI Canadian and Energy Income
Assuming the 90 days trading horizon CI Canadian REIT is expected to generate 0.29 times more return on investment than Energy Income. However, CI Canadian REIT is 3.44 times less risky than Energy Income. It trades about -0.06 of its potential returns per unit of risk. Energy Income is currently generating about -0.14 per unit of risk. If you would invest 1,644 in CI Canadian REIT on September 13, 2024 and sell it today you would lose (14.00) from holding CI Canadian REIT or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Canadian REIT vs. Energy Income
Performance |
| Timeline |
| CI Canadian REIT |
| Energy Income |
CI Canadian and Energy Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Canadian and Energy Income
The main advantage of trading using opposite CI Canadian and Energy Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Canadian position performs unexpectedly, Energy Income 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 Energy Income will offset losses from the drop in Energy Income's long position.| CI Canadian vs. BMO Equal Weight | CI Canadian vs. Vanguard FTSE Canadian | CI Canadian vs. iShares SPTSX Capped | CI Canadian vs. BMO Equal Weight |
| Energy Income vs. MINT Income Fund | Energy Income vs. Prime Dividend Corp | Energy Income vs. Canadian High Income | Energy Income vs. Precious Metals And |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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