Correlation Between Athabasca Oil and Canadian Imperial

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

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

Diversification Opportunities for Athabasca Oil and Canadian Imperial

0.19

Correlation Coefficient

Athabasca Oil  Canadian Imperial

Average diversification

The 3 months correlation between Athabasca and Canadian is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Athabasca Oil Corp 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 Athabasca Oil 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 Athabasca Oil Corp 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 Athabasca Oil i.e., Athabasca Oil and Canadian Imperial go up and down completely randomly.

Pair Corralation between Athabasca Oil and Canadian Imperial

Assuming the 90 days trading horizon Athabasca Oil is expected to generate 3.42 times less return on investment than Canadian Imperial. In addition to that, Athabasca Oil is 2.76 times more volatile than Canadian Imperial Bank. It trades about 0.03 of its total potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.29 per unit of volatility. If you would invest  7,875  in Canadian Imperial Bank on September 4, 2024 and sell it today you would earn a total of  1,130  from holding Canadian Imperial Bank or generate 14.35% return on investment over 90 days.

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

Athabasca Oil Corp  vs.  Canadian Imperial Bank

Athabasca Oil Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Athabasca Oil Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Athabasca Oil is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Canadian Imperial Bank

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Canadian Imperial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Athabasca Oil and Canadian Imperial

The main advantage of trading using opposite Athabasca Oil and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Athabasca Oil 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 Athabasca Oil Corp 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.