Correlation Between Canadian Imperial and Sprott Physical

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

Diversification Opportunities for Canadian Imperial and Sprott Physical

-0.72

Correlation Coefficient

Canadian Imperial  Sprott Physical

Pay attention - limited upside

The 3 months correlation between Canadian and Sprott is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Sprott Physical Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Platinum 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Platinum has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Sprott Physical go up and down completely randomly.

Pair Corralation between Canadian Imperial and Sprott Physical

Assuming the 90 days horizon Canadian Imperial is expected to generate 44.0 times less return on investment than Sprott Physical. But when comparing it to its historical volatility, Canadian Imperial Bank is 1.5 times less risky than Sprott Physical. It trades about 0.0 of its potential returns per unit of risk. Sprott Physical Platinum is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,330  in Sprott Physical Platinum on October 25, 2024 and sell it today you would earn a total of  36.00  from holding Sprott Physical Platinum or generate 2.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Canadian Imperial Bank  vs.  Sprott Physical Platinum

Canadian Imperial Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Canadian Imperial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sprott Physical Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Canadian Imperial and Sprott Physical

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

The idea behind Canadian Imperial Bank and Sprott Physical Platinum 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..