Correlation Between Sage Potash and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both Sage Potash 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 Sage Potash and Canadian Imperial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Potash Corp and Canadian Imperial Bank, you can compare the effects of market volatilities on Sage Potash 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 Sage Potash with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Potash and Canadian Imperial.
Diversification Opportunities for Sage Potash and Canadian Imperial
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sage and Canadian is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sage Potash Corp 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 Sage Potash 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 Sage Potash Corp 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 Sage Potash i.e., Sage Potash and Canadian Imperial go up and down completely randomly.
Pair Corralation between Sage Potash and Canadian Imperial
Assuming the 90 days trading horizon Sage Potash Corp is expected to under-perform the Canadian Imperial. In addition to that, Sage Potash is 39.42 times more volatile than Canadian Imperial Bank. It trades about -0.01 of its total potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.09 per unit of volatility. If you would invest 2,505 in Canadian Imperial Bank on August 29, 2024 and sell it today you would earn a total of 11.00 from holding Canadian Imperial Bank or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sage Potash Corp vs. Canadian Imperial Bank
Performance |
| Timeline |
| Sage Potash Corp |
| Canadian Imperial Bank |
Sage Potash and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Potash and Canadian Imperial
The main advantage of trading using opposite Sage Potash and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Potash 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.| Sage Potash vs. Uniteds Limited | Sage Potash vs. E L Financial Corp | Sage Potash vs. Canadian General Investments | Sage Potash vs. Clairvest Group |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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