Correlation Between CIBC Global and CIBC Qx

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

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

Diversification Opportunities for CIBC Global and CIBC Qx

-0.52

Correlation Coefficient

CIBC Global  CIBC Qx

Excellent diversification

The 3 months correlation between CIBC and CIBC is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Global Growth and CIBC Qx International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Qx International and CIBC 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 CIBC Global Growth are associated (or correlated) with CIBC Qx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Qx International has no effect on the direction of CIBC Global i.e., CIBC Global and CIBC Qx go up and down completely randomly.

Pair Corralation between CIBC Global and CIBC Qx

Assuming the 90 days trading horizon CIBC Global Growth is expected to under-perform the CIBC Qx. But the etf apears to be less risky and, when comparing its historical volatility, CIBC Global Growth is 2.13 times less risky than CIBC Qx. The etf trades about -0.07 of its potential returns per unit of risk. The CIBC Qx International is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,097  in CIBC Qx International on December 29, 2024 and sell it today you would lose (70.00) from holding CIBC Qx International or give up 3.34% of portfolio value over 90 days.

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

CIBC Global Growth  vs.  CIBC Qx International

CIBC Global Growth

Risk-Adjusted Performance

Very Weak

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

CIBC Qx International

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CIBC Global and CIBC Qx

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

The idea behind CIBC Global Growth and CIBC Qx International 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.