Correlation Between CIBC Canadian and CIBC Multifactor

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

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

Diversification Opportunities for CIBC Canadian and CIBC Multifactor

0.0

Correlation Coefficient

CIBC Canadian  CIBC Multifactor

Pay attention - limited upside

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

Pair Corralation between CIBC Canadian and CIBC Multifactor

If you would invest  2,469  in CIBC Canadian Equity on September 3, 2024 and sell it today you would earn a total of  310.00  from holding CIBC Canadian Equity or generate 12.56% return on investment over 90 days.

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

CIBC Canadian Equity  vs.  CIBC Multifactor Equity

CIBC Canadian Equity

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Canadian Equity are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, CIBC Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CIBC Multifactor Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CIBC Multifactor Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CIBC Multifactor is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CIBC Canadian and CIBC Multifactor

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

The idea behind CIBC Canadian Equity and CIBC Multifactor Equity 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.