Correlation Between Canadian Imperial and Voya Financial

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

Diversification Opportunities for Canadian Imperial and Voya Financial

-0.22

Correlation Coefficient

Canadian Imperial  Voya Financial

Very good diversification

The 3 months correlation between Canadian and Voya is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Voya Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Financial 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 Voya Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Financial has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Voya Financial go up and down completely randomly.

Pair Corralation between Canadian Imperial and Voya Financial

Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to generate 0.96 times more return on investment than Voya Financial. However, Canadian Imperial Bank is 1.05 times less risky than Voya Financial. It trades about -0.24 of its potential returns per unit of risk. Voya Financial is currently generating about -0.34 per unit of risk. If you would invest  6,547  in Canadian Imperial Bank on October 10, 2024 and sell it today you would lose (297.00) from holding Canadian Imperial Bank or give up 4.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Canadian Imperial Bank  vs.  Voya Financial

Canadian Imperial Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Canadian Imperial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Voya Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Canadian Imperial and Voya Financial

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

The idea behind Canadian Imperial Bank and Voya Financial 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.