Correlation Between CI Canadian and Dynamic Active

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

By analyzing existing cross correlation between CI Canadian Short Term and Dynamic Active Crossover, you can compare the effects of market volatilities on CI Canadian and Dynamic 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 CI Canadian with a short position of Dynamic Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Canadian and Dynamic Active.

Diversification Opportunities for CI Canadian and Dynamic Active

0.72

Correlation Coefficient

CI Canadian  Dynamic Active

Poor diversification

The 3 months correlation between CAGS and Dynamic is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CI Canadian Short Term and Dynamic Active Crossover in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Crossover and CI Canadian 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 CI Canadian Short Term are associated (or correlated) with Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Crossover has no effect on the direction of CI Canadian i.e., CI Canadian and Dynamic Active go up and down completely randomly.

Pair Corralation between CI Canadian and Dynamic Active

Assuming the 90 days trading horizon CI Canadian is expected to generate 1.98 times less return on investment than Dynamic Active. But when comparing it to its historical volatility, CI Canadian Short Term is 1.91 times less risky than Dynamic Active. It trades about 0.07 of its potential returns per unit of risk. Dynamic Active Crossover is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,937  in Dynamic Active Crossover on September 22, 2024 and sell it today you would earn a total of  15.00  from holding Dynamic Active Crossover or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.78%
Values	Daily Returns

CI Canadian Short Term  vs.  Dynamic Active Crossover

CI Canadian Short

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dynamic Active Crossover

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynamic Active Crossover has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dynamic 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 CI Canadian and Dynamic Active

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

The idea behind CI Canadian Short Term and Dynamic Active Crossover 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.