Correlation Between IShares Canadian and CIBC Core
Can any of the company-specific risk be diversified away by investing in both IShares Canadian and CIBC Core 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 IShares Canadian and CIBC Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian Universe and CIBC Core Fixed, you can compare the effects of market volatilities on IShares Canadian and CIBC Core 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 IShares Canadian with a short position of CIBC Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and CIBC Core.
Diversification Opportunities for IShares Canadian and CIBC Core
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and CIBC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Universe and CIBC Core Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Core Fixed and IShares 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 iShares Canadian Universe are associated (or correlated) with CIBC Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Core Fixed has no effect on the direction of IShares Canadian i.e., IShares Canadian and CIBC Core go up and down completely randomly.
Pair Corralation between IShares Canadian and CIBC Core
Assuming the 90 days trading horizon IShares Canadian is expected to generate 1.72 times less return on investment than CIBC Core. In addition to that, IShares Canadian is 1.06 times more volatile than CIBC Core Fixed. It trades about 0.08 of its total potential returns per unit of risk. CIBC Core Fixed is currently generating about 0.14 per unit of volatility. If you would invest 1,780 in CIBC Core Fixed on August 29, 2024 and sell it today you would earn a total of 21.00 from holding CIBC Core Fixed or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian Universe vs. CIBC Core Fixed
Performance |
| Timeline |
| iShares Canadian Universe |
| CIBC Core Fixed |
IShares Canadian and CIBC Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and CIBC Core
The main advantage of trading using opposite IShares Canadian and CIBC Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian position performs unexpectedly, CIBC Core 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 Core will offset losses from the drop in CIBC Core's long position.| IShares Canadian vs. Mackenzie Core Plus | IShares Canadian vs. Mackenzie Unconstrained Bond | IShares Canadian vs. Mackenzie Floating Rate | IShares Canadian vs. Mackenzie Canadian Short |
| CIBC Core vs. Mackenzie Core Plus | CIBC Core vs. Mackenzie Unconstrained Bond | CIBC Core vs. Mackenzie Floating Rate | CIBC Core vs. Mackenzie Canadian Short |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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