Correlation Between CI Global and Vanguard Growth

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

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

Diversification Opportunities for CI Global and Vanguard Growth

0.76

Correlation Coefficient

CI Global  Vanguard Growth

Poor diversification

The 3 months correlation between CGAA and Vanguard is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Asset and Vanguard Growth Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Portfolio and CI Global 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 Global Asset are associated (or correlated) with Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Portfolio has no effect on the direction of CI Global i.e., CI Global and Vanguard Growth go up and down completely randomly.

Pair Corralation between CI Global and Vanguard Growth

Assuming the 90 days trading horizon CI Global Asset is expected to generate 1.08 times more return on investment than Vanguard Growth. However, CI Global is 1.08 times more volatile than Vanguard Growth Portfolio. It trades about 0.04 of its potential returns per unit of risk. Vanguard Growth Portfolio is currently generating about 0.03 per unit of risk. If you would invest  2,806  in CI Global Asset on December 2, 2024 and sell it today you would earn a total of  45.00  from holding CI Global Asset or generate 1.6% return on investment over 90 days.

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

CI Global Asset  vs.  Vanguard Growth Portfolio

CI Global Asset

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Asset are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Vanguard Growth Portfolio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Portfolio are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard Growth 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 Global and Vanguard Growth

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

The idea behind CI Global Asset and Vanguard Growth Portfolio 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.