Correlation Between CI Financial and Falcon Energy

Can any of the company-specific risk be diversified away by investing in both CI Financial and Falcon Energy 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 Falcon Energy 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 Falcon Energy Materials, you can compare the effects of market volatilities on CI Financial and Falcon Energy 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 Falcon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Financial and Falcon Energy.

Diversification Opportunities for CI Financial and Falcon Energy

-0.41

Correlation Coefficient

CI Financial  Falcon Energy

Very good diversification

The 3 months correlation between CIX and Falcon is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials 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 Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of CI Financial i.e., CI Financial and Falcon Energy go up and down completely randomly.

Pair Corralation between CI Financial and Falcon Energy

Assuming the 90 days trading horizon CI Financial Corp is expected to generate 0.04 times more return on investment than Falcon Energy. However, CI Financial Corp is 25.26 times less risky than Falcon Energy. It trades about 0.16 of its potential returns per unit of risk. Falcon Energy Materials is currently generating about -0.02 per unit of risk. If you would invest  3,071  in CI Financial Corp on December 26, 2024 and sell it today you would earn a total of  57.00  from holding CI Financial Corp or generate 1.86% return on investment over 90 days.

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

CI Financial Corp  vs.  Falcon Energy Materials

CI Financial Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI Financial Corp are ranked lower than 12 (%) 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.

Falcon Energy Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Falcon Energy Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with CI Financial and Falcon Energy

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

The idea behind CI Financial Corp and Falcon Energy Materials 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.