Correlation Between IShares Canadian and CIBC Conservative
Can any of the company-specific risk be diversified away by investing in both IShares Canadian 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 IShares Canadian and CIBC Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian Value and CIBC Conservative Fixed, you can compare the effects of market volatilities on IShares Canadian 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 IShares Canadian with a short position of CIBC Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and CIBC Conservative.
Diversification Opportunities for IShares Canadian and CIBC Conservative
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and CIBC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Value 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 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 Value 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 IShares Canadian i.e., IShares Canadian and CIBC Conservative go up and down completely randomly.
Pair Corralation between IShares Canadian and CIBC Conservative
Assuming the 90 days trading horizon iShares Canadian Value is expected to generate 3.34 times more return on investment than CIBC Conservative. However, IShares Canadian is 3.34 times more volatile than CIBC Conservative Fixed. It trades about 0.15 of its potential returns per unit of risk. CIBC Conservative Fixed is currently generating about 0.15 per unit of risk. If you would invest 3,176 in iShares Canadian Value on September 14, 2024 and sell it today you would earn a total of 827.00 from holding iShares Canadian Value or generate 26.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian Value vs. CIBC Conservative Fixed
Performance |
| Timeline |
| iShares Canadian Value |
| CIBC Conservative Fixed |
IShares Canadian and CIBC Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and CIBC Conservative
The main advantage of trading using opposite IShares Canadian and CIBC Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian 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.| IShares Canadian vs. iShares Canadian Growth | IShares Canadian vs. iShares Canadian Government | IShares Canadian vs. iShares SPTSX Small | IShares Canadian vs. iShares SPTSX Completion |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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