Correlation Between IShares Core and CIBC Canadian
Can any of the company-specific risk be diversified away by investing in both IShares Core and CIBC Canadian 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 Core and CIBC Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SPTSX and CIBC Canadian Equity, you can compare the effects of market volatilities on IShares Core and CIBC Canadian 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 Core with a short position of CIBC Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and CIBC Canadian.
Diversification Opportunities for IShares Core and CIBC Canadian
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and CIBC is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SPTSX and CIBC Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Canadian Equity and IShares Core 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 Core SPTSX are associated (or correlated) with CIBC Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Canadian Equity has no effect on the direction of IShares Core i.e., IShares Core and CIBC Canadian go up and down completely randomly.
Pair Corralation between IShares Core and CIBC Canadian
Assuming the 90 days trading horizon iShares Core SPTSX is expected to generate about the same return on investment as CIBC Canadian Equity. But, iShares Core SPTSX is 1.12 times less risky than CIBC Canadian. It trades about 0.65 of its potential returns per unit of risk. CIBC Canadian Equity is currently generating about 0.58 per unit of risk. If you would invest 2,605 in CIBC Canadian Equity on September 1, 2024 and sell it today you would earn a total of 174.00 from holding CIBC Canadian Equity or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Core SPTSX vs. CIBC Canadian Equity
Performance |
| Timeline |
| iShares Core SPTSX |
| CIBC Canadian Equity |
IShares Core and CIBC Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and CIBC Canadian
The main advantage of trading using opposite IShares Core and CIBC Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, CIBC Canadian 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 Canadian will offset losses from the drop in CIBC Canadian's long position.| IShares Core vs. iShares SPTSX 60 | IShares Core vs. iShares Core SP | IShares Core vs. iShares SPTSX Composite | IShares Core vs. iShares Core MSCI |
| CIBC Canadian vs. iShares SPTSX 60 | CIBC Canadian vs. iShares Core SPTSX | CIBC Canadian vs. Vanguard FTSE Canada | CIBC Canadian vs. Global X SPTSX |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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