Correlation Between Canadian Imperial and Canadian Natural

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

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

Diversification Opportunities for Canadian Imperial and Canadian Natural

0.0

Correlation Coefficient

Canadian Imperial  Canadian Natural

Pay attention - limited upside

The 3 months correlation between Canadian and Canadian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Canadian Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Natural Res and Canadian Imperial 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 Canadian Imperial Bank are associated (or correlated) with Canadian Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Natural Res has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Canadian Natural go up and down completely randomly.

Pair Corralation between Canadian Imperial and Canadian Natural

If you would invest (100.00) in Canadian Imperial Bank on October 22, 2024 and sell it today you would earn a total of  100.00  from holding Canadian Imperial Bank or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Canadian Imperial Bank  vs.  Canadian Natural Resources

Canadian Imperial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Imperial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Canadian Imperial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Canadian Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Canadian Imperial and Canadian Natural

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

The idea behind Canadian Imperial Bank and Canadian Natural Resources 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.