Correlation Between CIBC Core and CIBC Global

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

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

Diversification Opportunities for CIBC Core and CIBC Global

0.24

Correlation Coefficient

CIBC Core  CIBC Global

Modest diversification

The 3 months correlation between CIBC and CIBC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Core Fixed and CIBC Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Global Growth and CIBC Core 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 Core Fixed are associated (or correlated) with CIBC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Global Growth has no effect on the direction of CIBC Core i.e., CIBC Core and CIBC Global go up and down completely randomly.

Pair Corralation between CIBC Core and CIBC Global

Assuming the 90 days trading horizon CIBC Core is expected to generate 4.94 times less return on investment than CIBC Global. But when comparing it to its historical volatility, CIBC Core Fixed is 2.07 times less risky than CIBC Global. It trades about 0.07 of its potential returns per unit of risk. CIBC Global Growth is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,891  in CIBC Global Growth on September 3, 2024 and sell it today you would earn a total of  233.00  from holding CIBC Global Growth or generate 8.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CIBC Core Fixed  vs.  CIBC Global Growth

CIBC Core Fixed

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Core Fixed are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CIBC Core is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

CIBC Global Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Global Growth are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CIBC Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CIBC Core and CIBC Global

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

The idea behind CIBC Core Fixed and CIBC Global Growth 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.