Correlation Between Canadian Imperial and Wilmington Capital

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

Diversification Opportunities for Canadian Imperial and Wilmington Capital

-0.36

Correlation Coefficient

Canadian Imperial  Wilmington Capital

Very good diversification

The 3 months correlation between Canadian and Wilmington is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital 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 Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Wilmington Capital go up and down completely randomly.

Pair Corralation between Canadian Imperial and Wilmington Capital

Assuming the 90 days horizon Canadian Imperial Bank is expected to generate 0.22 times more return on investment than Wilmington Capital. However, Canadian Imperial Bank is 4.49 times less risky than Wilmington Capital. It trades about 0.17 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about 0.02 per unit of risk. If you would invest  5,879  in Canadian Imperial Bank on October 9, 2024 and sell it today you would earn a total of  3,098  from holding Canadian Imperial Bank or generate 52.7% 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.  Wilmington Capital Management

Canadian Imperial Bank

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 15 (%) 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.

Wilmington Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Capital Management 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 newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Canadian Imperial and Wilmington Capital

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

The idea behind Canadian Imperial Bank and Wilmington Capital Management 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.