Correlation Between CDSPI Petite and CI Global

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

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

Diversification Opportunities for CDSPI Petite and CI Global

-0.51

Correlation Coefficient

CDSPI Petite  CI Global

Excellent diversification

The 3 months correlation between CDSPI and 0P000070H9 is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding CDSPI petite cap and CI Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Health and CDSPI Petite 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 CDSPI petite cap 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 Health has no effect on the direction of CDSPI Petite i.e., CDSPI Petite and CI Global go up and down completely randomly.

Pair Corralation between CDSPI Petite and CI Global

Assuming the 90 days trading horizon CDSPI petite cap is expected to generate 1.6 times more return on investment than CI Global. However, CDSPI Petite is 1.6 times more volatile than CI Global Health. It trades about 0.09 of its potential returns per unit of risk. CI Global Health is currently generating about -0.2 per unit of risk. If you would invest  6,701  in CDSPI petite cap on October 11, 2024 and sell it today you would earn a total of  410.00  from holding CDSPI petite cap or generate 6.12% return on investment over 90 days.

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

CDSPI petite cap  vs.  CI Global Health

CDSPI petite cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CDSPI petite cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, CDSPI Petite may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with CDSPI Petite and CI Global

The main advantage of trading using opposite CDSPI Petite and CI Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDSPI Petite 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.

The idea behind CDSPI petite cap and CI Global 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.