Correlation Between CI Global and Sustainable Innovation

Can any of the company-specific risk be diversified away by investing in both CI Global and Sustainable Innovation 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 CI Global and Sustainable Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CI Global Health and Sustainable Innovation Health, you can compare the effects of market volatilities on CI Global and Sustainable Innovation 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 CI Global with a short position of Sustainable Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Global and Sustainable Innovation.

Diversification Opportunities for CI Global and Sustainable Innovation

-0.46

Correlation Coefficient

CI Global  Sustainable Innovation

Very good diversification

The 3 months correlation between 0P000070H9 and Sustainable is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Health and Sustainable Innovation Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sustainable Innovation and CI Global 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 CI Global Health are associated (or correlated) with Sustainable Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sustainable Innovation has no effect on the direction of CI Global i.e., CI Global and Sustainable Innovation go up and down completely randomly.

Pair Corralation between CI Global and Sustainable Innovation

Assuming the 90 days trading horizon CI Global is expected to generate 1.04 times less return on investment than Sustainable Innovation. But when comparing it to its historical volatility, CI Global Health is 1.36 times less risky than Sustainable Innovation. It trades about 0.19 of its potential returns per unit of risk. Sustainable Innovation Health is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,352  in Sustainable Innovation Health on October 27, 2024 and sell it today you would earn a total of  48.00  from holding Sustainable Innovation Health or generate 3.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CI Global Health  vs.  Sustainable Innovation Health

CI Global Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI Global Health has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, CI Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Sustainable Innovation

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sustainable Innovation Health are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical indicators, Sustainable Innovation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CI Global and Sustainable Innovation

The main advantage of trading using opposite CI Global and Sustainable Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Global position performs unexpectedly, Sustainable Innovation 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 Sustainable Innovation will offset losses from the drop in Sustainable Innovation's long position.

The idea behind CI Global Health and Sustainable Innovation Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.