Correlation Between Bip Investment and CI Financial

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

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

Diversification Opportunities for Bip Investment and CI Financial

0.57

Correlation Coefficient

Bip Investment  CI Financial

Very weak diversification

The 3 months correlation between Bip and CIX is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bip Investment Corp and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial Corp and Bip Investment 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 Bip Investment Corp are associated (or correlated) with CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of Bip Investment i.e., Bip Investment and CI Financial go up and down completely randomly.

Pair Corralation between Bip Investment and CI Financial

If you would invest  3,092  in CI Financial Corp on October 7, 2024 and sell it today you would earn a total of  3.00  from holding CI Financial Corp or generate 0.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	78.95%
Values	Daily Returns

Bip Investment Corp  vs.  CI Financial Corp

Bip Investment Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Bip Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Bip Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CI Financial Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Financial Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bip Investment and CI Financial

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

The idea behind Bip Investment Corp and CI Financial Corp 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.