Correlation Between CI Gold and CI Canada

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

By analyzing existing cross correlation between CI Gold Giants and CI Canada Lifeco, you can compare the effects of market volatilities on CI Gold and CI Canada 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 Gold with a short position of CI Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Gold and CI Canada.

Diversification Opportunities for CI Gold and CI Canada

0.73

Correlation Coefficient

CI Gold  CI Canada

Poor diversification

The 3 months correlation between CGXF and FLI is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CI Gold Giants and CI Canada Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canada Lifeco and CI Gold 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 Gold Giants are associated (or correlated) with CI Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canada Lifeco has no effect on the direction of CI Gold i.e., CI Gold and CI Canada go up and down completely randomly.

Pair Corralation between CI Gold and CI Canada

Assuming the 90 days trading horizon CI Gold Giants is expected to generate 1.19 times more return on investment than CI Canada. However, CI Gold is 1.19 times more volatile than CI Canada Lifeco. It trades about 0.34 of its potential returns per unit of risk. CI Canada Lifeco is currently generating about 0.08 per unit of risk. If you would invest  990.00  in CI Gold Giants on December 29, 2024 and sell it today you would earn a total of  337.00  from holding CI Gold Giants or generate 34.04% return on investment over 90 days.

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

CI Gold Giants  vs.  CI Canada Lifeco

CI Gold Giants

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CI Gold Giants are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

CI Canada Lifeco

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canada Lifeco are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, CI Canada 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 Gold and CI Canada

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

The idea behind CI Gold Giants and CI Canada Lifeco 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.