Correlation Between Exxon and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and Canadian Imperial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EXXON MOBIL CDR and Canadian Imperial Bank, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Canadian Imperial.
Diversification Opportunities for Exxon and Canadian Imperial
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Exxon and Canadian is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR 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 Exxon 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 EXXON MOBIL CDR 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 Exxon i.e., Exxon and Canadian Imperial go up and down completely randomly.
Pair Corralation between Exxon and Canadian Imperial
Assuming the 90 days trading horizon EXXON MOBIL CDR is expected to under-perform the Canadian Imperial. In addition to that, Exxon is 1.29 times more volatile than Canadian Imperial Bank. It trades about -0.09 of its total potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.11 per unit of volatility. If you would invest 8,546 in Canadian Imperial Bank on October 22, 2024 and sell it today you would earn a total of 520.00 from holding Canadian Imperial Bank or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EXXON MOBIL CDR vs. Canadian Imperial Bank
Performance |
| Timeline |
| EXXON MOBIL CDR |
| Canadian Imperial Bank |
Exxon and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Canadian Imperial
The main advantage of trading using opposite Exxon and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.| Exxon vs. Data Communications Management | Exxon vs. Brookfield Asset Management | Exxon vs. Precious Metals And | Exxon vs. AGF Management Limited |
| Canadian Imperial vs. Bank of Montreal | Canadian Imperial vs. Bank of Nova | Canadian Imperial vs. Royal Bank of | Canadian Imperial vs. Toronto Dominion Bank |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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