Correlation Between Canadian Imperial and Finnovate Acquisition

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

Diversification Opportunities for Canadian Imperial and Finnovate Acquisition

-0.72

Correlation Coefficient

Canadian Imperial  Finnovate Acquisition

Pay attention - limited upside

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

Pair Corralation between Canadian Imperial and Finnovate Acquisition

Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to under-perform the Finnovate Acquisition. In addition to that, Canadian Imperial is 7.77 times more volatile than Finnovate Acquisition Corp. It trades about -0.1 of its total potential returns per unit of risk. Finnovate Acquisition Corp is currently generating about -0.12 per unit of volatility. If you would invest  1,165  in Finnovate Acquisition Corp on December 27, 2024 and sell it today you would lose (3.00) from holding Finnovate Acquisition Corp or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	21.67%
Values	Daily Returns

Canadian Imperial Bank  vs.  Finnovate Acquisition Corp

Canadian Imperial Bank

Risk-Adjusted Performance

Very Weak

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

Finnovate Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Finnovate Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Finnovate Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Canadian Imperial and Finnovate Acquisition

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

The idea behind Canadian Imperial Bank and Finnovate Acquisition 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 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..