Correlation Between CIBC Flexible and CI Global

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

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

Diversification Opportunities for CIBC Flexible and CI Global

0.2

Correlation Coefficient

CIBC Flexible  CI Global

Modest diversification

The 3 months correlation between CIBC and CGRA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Flexible Yield and CI Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Real and CIBC Flexible 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 Flexible Yield are associated (or correlated) with CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Real has no effect on the direction of CIBC Flexible i.e., CIBC Flexible and CI Global go up and down completely randomly.

Pair Corralation between CIBC Flexible and CI Global

Assuming the 90 days trading horizon CIBC Flexible Yield is expected to generate 0.1 times more return on investment than CI Global. However, CIBC Flexible Yield is 10.24 times less risky than CI Global. It trades about 0.04 of its potential returns per unit of risk. CI Global Real is currently generating about -0.05 per unit of risk. If you would invest  1,697  in CIBC Flexible Yield on October 24, 2024 and sell it today you would earn a total of  1.00  from holding CIBC Flexible Yield or generate 0.06% return on investment over 90 days.

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

CIBC Flexible Yield  vs.  CI Global Real

CIBC Flexible Yield

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Flexible Yield are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CIBC Flexible is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CIBC Flexible and CI Global

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

The idea behind CIBC Flexible Yield and CI Global Real 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.