Correlation Between CI Financial and Exco Technologies

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

Diversification Opportunities for CI Financial and Exco Technologies

-0.82

Correlation Coefficient

CI Financial  Exco Technologies

Pay attention - limited upside

The 3 months correlation between CIX and Exco is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and Exco Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exco Technologies 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 Exco Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exco Technologies has no effect on the direction of CI Financial i.e., CI Financial and Exco Technologies go up and down completely randomly.

Pair Corralation between CI Financial and Exco Technologies

Assuming the 90 days trading horizon CI Financial Corp is expected to generate 0.12 times more return on investment than Exco Technologies. However, CI Financial Corp is 8.03 times less risky than Exco Technologies. It trades about -0.05 of its potential returns per unit of risk. Exco Technologies Limited is currently generating about -0.46 per unit of risk. If you would invest  3,130  in CI Financial Corp on December 5, 2024 and sell it today you would lose (5.00) from holding CI Financial Corp or give up 0.16% of portfolio value over 90 days.

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

CI Financial Corp  vs.  Exco Technologies Limited

CI Financial Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI Financial Corp are ranked lower than 7 (%) 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.

Exco Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exco Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CI Financial and Exco Technologies

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

The idea behind CI Financial Corp and Exco Technologies Limited 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.