Correlation Between INVITATION HOMES and Canadian Imperial

Can any of the company-specific risk be diversified away by investing in both INVITATION HOMES and Canadian Imperial 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 INVITATION HOMES and Canadian Imperial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INVITATION HOMES DL and Canadian Imperial Bank, you can compare the effects of market volatilities on INVITATION HOMES and Canadian Imperial 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 INVITATION HOMES with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVITATION HOMES and Canadian Imperial.

Diversification Opportunities for INVITATION HOMES and Canadian Imperial

0.0

Correlation Coefficient

INVITATION HOMES  Canadian Imperial

Pay attention - limited upside

The 3 months correlation between INVITATION and Canadian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding INVITATION HOMES DL and Canadian Imperial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank and INVITATION HOMES 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 INVITATION HOMES DL are associated (or correlated) with Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of INVITATION HOMES i.e., INVITATION HOMES and Canadian Imperial go up and down completely randomly.

Pair Corralation between INVITATION HOMES and Canadian Imperial

If you would invest (100.00) in Canadian Imperial Bank on October 25, 2024 and sell it today you would earn a total of  100.00  from holding Canadian Imperial Bank or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

INVITATION HOMES DL  vs.  Canadian Imperial Bank

INVITATION HOMES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INVITATION HOMES DL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, INVITATION HOMES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Canadian Imperial Bank

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Canadian Imperial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Canadian Imperial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with INVITATION HOMES and Canadian Imperial

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

The idea behind INVITATION HOMES DL and Canadian Imperial Bank 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.