Correlation Between Canadian Imperial and New Destiny

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

Diversification Opportunities for Canadian Imperial and New Destiny

-0.7

Correlation Coefficient

Canadian Imperial  New Destiny

Excellent diversification

The 3 months correlation between Canadian and New is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and New Destiny Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Destiny Mining 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 New Destiny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Destiny Mining has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and New Destiny go up and down completely randomly.

Pair Corralation between Canadian Imperial and New Destiny

Assuming the 90 days trading horizon Canadian Imperial is expected to generate 7.45 times less return on investment than New Destiny. But when comparing it to its historical volatility, Canadian Imperial Bank is 14.93 times less risky than New Destiny. It trades about 0.11 of its potential returns per unit of risk. New Destiny Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3.00  in New Destiny Mining on October 24, 2024 and sell it today you would earn a total of  1.00  from holding New Destiny Mining or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.76%
Values	Daily Returns

Canadian Imperial Bank  vs.  New Destiny Mining

Canadian Imperial Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 4 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

New Destiny Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Destiny Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic 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 Canadian Imperial and New Destiny

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

The idea behind Canadian Imperial Bank and New Destiny Mining 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 Commodity Directory module to find actively traded commodities issued by global exchanges.