Correlation Between CVB Financial and Imperial Oil

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

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

Diversification Opportunities for CVB Financial and Imperial Oil

-0.04

Correlation Coefficient

CVB Financial  Imperial Oil

Good diversification

The 3 months correlation between CVB and Imperial is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial Corp and Imperial Oil Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Oil Limited and CVB Financial 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 CVB Financial Corp are associated (or correlated) with Imperial Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Oil Limited has no effect on the direction of CVB Financial i.e., CVB Financial and Imperial Oil go up and down completely randomly.

Pair Corralation between CVB Financial and Imperial Oil

Assuming the 90 days horizon CVB Financial Corp is expected to generate 1.54 times more return on investment than Imperial Oil. However, CVB Financial is 1.54 times more volatile than Imperial Oil Limited. It trades about 0.14 of its potential returns per unit of risk. Imperial Oil Limited is currently generating about -0.11 per unit of risk. If you would invest  1,624  in CVB Financial Corp on October 10, 2024 and sell it today you would earn a total of  416.00  from holding CVB Financial Corp or generate 25.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

CVB Financial Corp  vs.  Imperial Oil Limited

CVB Financial Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVB Financial Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CVB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Imperial Oil Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Oil Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CVB Financial and Imperial Oil

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

The idea behind CVB Financial Corp and Imperial Oil Limited 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 Global Correlations module to find global opportunities by holding instruments from different markets.