Correlation Between First Asset and CI Global
Can any of the company-specific risk be diversified away by investing in both First Asset and CI Global 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 First Asset and CI Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Asset Morningstar and CI Global Financial, you can compare the effects of market volatilities on First Asset and CI Global 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 First Asset with a short position of CI Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and CI Global.
Diversification Opportunities for First Asset and CI Global
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and FSF is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Morningstar and CI Global Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Financial and First Asset 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 First Asset Morningstar are associated (or correlated) with CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Financial has no effect on the direction of First Asset i.e., First Asset and CI Global go up and down completely randomly.
Pair Corralation between First Asset and CI Global
Assuming the 90 days trading horizon First Asset is expected to generate 1.72 times less return on investment than CI Global. But when comparing it to its historical volatility, First Asset Morningstar is 1.32 times less risky than CI Global. It trades about 0.23 of its potential returns per unit of risk. CI Global Financial is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,895 in CI Global Financial on August 29, 2024 and sell it today you would earn a total of 158.00 from holding CI Global Financial or generate 5.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Asset Morningstar vs. CI Global Financial
Performance |
| Timeline |
| First Asset Morningstar |
| CI Global Financial |
First Asset and CI Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Asset and CI Global
The main advantage of trading using opposite First Asset and CI Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Asset position performs unexpectedly, CI Global 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 CI Global will offset losses from the drop in CI Global's long position.| First Asset vs. Vanguard FTSE Developed | First Asset vs. BMO MSCI EAFE | First Asset vs. BMO Low Volatility |
| CI Global vs. Brompton Global Dividend | CI Global vs. Tech Leaders Income | CI Global vs. Global Healthcare Income | CI Global vs. Brompton European Dividend |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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