Correlation Between Armada Hflr and CIBC Active

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and CIBC Active 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 Armada Hflr and CIBC Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and CIBC Active Investment, you can compare the effects of market volatilities on Armada Hflr and CIBC Active 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 Armada Hflr with a short position of CIBC Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and CIBC Active.

Diversification Opportunities for Armada Hflr and CIBC Active

0.25

Correlation Coefficient

Armada Hflr  CIBC Active

Modest diversification

The 3 months correlation between Armada and CIBC is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and CIBC Active Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Active Investment and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with CIBC Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Active Investment has no effect on the direction of Armada Hflr i.e., Armada Hflr and CIBC Active go up and down completely randomly.

Pair Corralation between Armada Hflr and CIBC Active

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the CIBC Active. In addition to that, Armada Hflr is 5.06 times more volatile than CIBC Active Investment. It trades about -0.08 of its total potential returns per unit of risk. CIBC Active Investment is currently generating about 0.01 per unit of volatility. If you would invest  2,022  in CIBC Active Investment on September 14, 2024 and sell it today you would earn a total of  4.00  from holding CIBC Active Investment or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Armada Hflr Pr  vs.  CIBC Active Investment

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

CIBC Active Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CIBC Active Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CIBC Active is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and CIBC Active

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

The idea behind Armada Hflr Pr and CIBC Active Investment 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.