Correlation Between Canadian Imperial and Precious Metals

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

By analyzing existing cross correlation between Canadian Imperial Bank and Precious Metals And, you can compare the effects of market volatilities on Canadian Imperial and Precious Metals 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 Canadian Imperial with a short position of Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Precious Metals.

Diversification Opportunities for Canadian Imperial and Precious Metals

-0.07

Correlation Coefficient

Canadian Imperial  Precious Metals

Good diversification

The 3 months correlation between Canadian and Precious is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Precious Metals And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals And and Canadian Imperial 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 Canadian Imperial Bank are associated (or correlated) with Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals And has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Precious Metals go up and down completely randomly.

Pair Corralation between Canadian Imperial and Precious Metals

Assuming the 90 days trading horizon Canadian Imperial Bank is expected to generate 0.14 times more return on investment than Precious Metals. However, Canadian Imperial Bank is 6.96 times less risky than Precious Metals. It trades about 0.16 of its potential returns per unit of risk. Precious Metals And is currently generating about 0.01 per unit of risk. If you would invest  2,459  in Canadian Imperial Bank on September 1, 2024 and sell it today you would earn a total of  71.00  from holding Canadian Imperial Bank or generate 2.89% return on investment over 90 days.

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

Canadian Imperial Bank  vs.  Precious Metals And

Canadian Imperial Bank

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Canadian Imperial is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Precious Metals And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precious Metals And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Precious Metals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Canadian Imperial and Precious Metals

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

The idea behind Canadian Imperial Bank and Precious Metals And 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.