Correlation Between CI Global and TD Comfort

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

By analyzing existing cross correlation between CI Global Alpha and TD Comfort Balanced, you can compare the effects of market volatilities on CI Global and TD Comfort 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 TD Comfort. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Global and TD Comfort.

Diversification Opportunities for CI Global and TD Comfort

0.86

Correlation Coefficient

CI Global  TD Comfort

Very poor diversification

The 3 months correlation between 0P000070HA and 0P0001FAU8 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Alpha and TD Comfort Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Comfort Balanced 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 Alpha are associated (or correlated) with TD Comfort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Comfort Balanced has no effect on the direction of CI Global i.e., CI Global and TD Comfort go up and down completely randomly.

Pair Corralation between CI Global and TD Comfort

Assuming the 90 days trading horizon CI Global Alpha is expected to generate 4.35 times more return on investment than TD Comfort. However, CI Global is 4.35 times more volatile than TD Comfort Balanced. It trades about 0.28 of its potential returns per unit of risk. TD Comfort Balanced is currently generating about 0.22 per unit of risk. If you would invest  8,375  in CI Global Alpha on September 4, 2024 and sell it today you would earn a total of  2,116  from holding CI Global Alpha or generate 25.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

CI Global Alpha  vs.  TD Comfort Balanced

CI Global Alpha

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Alpha are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, CI Global sustained solid returns over the last few months and may actually be approaching a breakup point.

TD Comfort Balanced

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TD Comfort Balanced are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable technical and fundamental indicators, TD Comfort is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CI Global and TD Comfort

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

The idea behind CI Global Alpha and TD Comfort Balanced 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.