Correlation Between CI Financial and New Found

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

Diversification Opportunities for CI Financial and New Found

-0.83

Correlation Coefficient

CI Financial  New Found

Pay attention - limited upside

The 3 months correlation between CIX and New is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and New Found Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Found Gold 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 New Found. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Found Gold has no effect on the direction of CI Financial i.e., CI Financial and New Found go up and down completely randomly.

Pair Corralation between CI Financial and New Found

Assuming the 90 days trading horizon CI Financial is expected to generate 12.04 times less return on investment than New Found. But when comparing it to its historical volatility, CI Financial Corp is 12.78 times less risky than New Found. It trades about 0.06 of its potential returns per unit of risk. New Found Gold is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  250.00  in New Found Gold on October 9, 2024 and sell it today you would earn a total of  7.00  from holding New Found Gold or generate 2.8% return on investment over 90 days.

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

CI Financial Corp  vs.  New Found Gold

CI Financial Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI Financial Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

New Found Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Found Gold 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 basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with CI Financial and New Found

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

The idea behind CI Financial Corp and New Found Gold 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.