Correlation Between CDSPI Global and CI Global

Can any of the company-specific risk be diversified away by investing in both CDSPI Global 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 Global 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 Global Growth and CI Global Alpha, you can compare the effects of market volatilities on CDSPI Global 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 Global with a short position of CI Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDSPI Global and CI Global.

Diversification Opportunities for CDSPI Global and CI Global

0.85

Correlation Coefficient

CDSPI Global  CI Global

Very poor diversification

The 3 months correlation between CDSPI and CIG18006 is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding CDSPI Global Growth and CI Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Alpha and CDSPI 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 CDSPI Global Growth 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 Alpha has no effect on the direction of CDSPI Global i.e., CDSPI Global and CI Global go up and down completely randomly.

Pair Corralation between CDSPI Global and CI Global

Assuming the 90 days trading horizon CDSPI Global Growth is expected to generate 0.49 times more return on investment than CI Global. However, CDSPI Global Growth is 2.05 times less risky than CI Global. It trades about -0.03 of its potential returns per unit of risk. CI Global Alpha is currently generating about -0.09 per unit of risk. If you would invest  6,085  in CDSPI Global Growth on December 26, 2024 and sell it today you would lose (99.00) from holding CDSPI Global Growth or give up 1.63% of portfolio value over 90 days.

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

CDSPI Global Growth  vs.  CI Global Alpha

CDSPI Global Growth

Risk-Adjusted Performance

Very Weak

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

CI Global Alpha

Risk-Adjusted Performance

Very Weak

Over the last 90 days CI Global Alpha has generated negative risk-adjusted returns adding no value to fund investors. Despite latest unfluctuating 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 Global and CI Global

The main advantage of trading using opposite CDSPI Global and CI Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDSPI Global 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 Global Growth and CI Global Alpha 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.