Correlation Between CI Financial and Amazon CDR

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

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

Diversification Opportunities for CI Financial and Amazon CDR

-0.15

Correlation Coefficient

CI Financial  Amazon CDR

Good diversification

The 3 months correlation between CIX and Amazon is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR and CI Financial 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 Financial Corp are associated (or correlated) with Amazon CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon CDR has no effect on the direction of CI Financial i.e., CI Financial and Amazon CDR go up and down completely randomly.

Pair Corralation between CI Financial and Amazon CDR

Assuming the 90 days trading horizon CI Financial Corp is expected to generate 0.11 times more return on investment than Amazon CDR. However, CI Financial Corp is 9.34 times less risky than Amazon CDR. It trades about 0.13 of its potential returns per unit of risk. Amazon CDR is currently generating about -0.12 per unit of risk. If you would invest  3,075  in CI Financial Corp on December 29, 2024 and sell it today you would earn a total of  47.00  from holding CI Financial Corp or generate 1.53% return on investment over 90 days.

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

CI Financial Corp  vs.  Amazon CDR

CI Financial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Amazon CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CI Financial and Amazon CDR

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

The idea behind CI Financial Corp and Amazon CDR 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.