Correlation Between Visa and CIBC Conservative
Can any of the company-specific risk be diversified away by investing in both Visa and CIBC Conservative 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 Visa and CIBC Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and CIBC Conservative Fixed, you can compare the effects of market volatilities on Visa and CIBC Conservative 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 Visa with a short position of CIBC Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and CIBC Conservative.
Diversification Opportunities for Visa and CIBC Conservative
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and CIBC is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and CIBC Conservative Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Conservative Fixed and Visa 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 Visa Class A are associated (or correlated) with CIBC Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Conservative Fixed has no effect on the direction of Visa i.e., Visa and CIBC Conservative go up and down completely randomly.
Pair Corralation between Visa and CIBC Conservative
Taking into account the 90-day investment horizon Visa Class A is expected to generate 4.98 times more return on investment than CIBC Conservative. However, Visa is 4.98 times more volatile than CIBC Conservative Fixed. It trades about 0.44 of its potential returns per unit of risk. CIBC Conservative Fixed is currently generating about 0.13 per unit of risk. If you would invest 31,440 in Visa Class A on November 3, 2024 and sell it today you would earn a total of 2,740 from holding Visa Class A or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Visa Class A vs. CIBC Conservative Fixed
Performance |
| Timeline |
| Visa Class A |
| CIBC Conservative Fixed |
Visa and CIBC Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and CIBC Conservative
The main advantage of trading using opposite Visa and CIBC Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, CIBC Conservative 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 CIBC Conservative will offset losses from the drop in CIBC Conservative's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| CIBC Conservative vs. CIBC Core Fixed | CIBC Conservative vs. CIBC Canadian Equity | CIBC Conservative vs. CIBC Clean Energy | CIBC Conservative vs. CIBC Qx Low |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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