Correlation Between Canadian Imperial and GGL Resources

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

Diversification Opportunities for Canadian Imperial and GGL Resources

-0.32

Correlation Coefficient

Canadian Imperial  GGL Resources

Very good diversification

The 3 months correlation between Canadian and GGL is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and GGL Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GGL Resources Corp 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 GGL Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GGL Resources Corp has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and GGL Resources go up and down completely randomly.

Pair Corralation between Canadian Imperial and GGL Resources

Assuming the 90 days horizon Canadian Imperial is expected to generate 2.26 times less return on investment than GGL Resources. But when comparing it to its historical volatility, Canadian Imperial Bank is 8.56 times less risky than GGL Resources. It trades about 0.22 of its potential returns per unit of risk. GGL Resources Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.00  in GGL Resources Corp on October 7, 2024 and sell it today you would earn a total of  0.50  from holding GGL Resources Corp or generate 12.5% 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.  GGL Resources Corp

Canadian Imperial Bank

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Canadian Imperial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GGL Resources Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GGL Resources Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, GGL Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian Imperial and GGL Resources

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

The idea behind Canadian Imperial Bank and GGL Resources Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.