Correlation Between CI Munro and CI Global

Can any of the company-specific risk be diversified away by investing in both CI Munro and CI Global 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 CI Munro and CI Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CI Munro Alternative and CI Global Asset, you can compare the effects of market volatilities on CI Munro and CI Global 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 CI Munro with a short position of CI Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Munro and CI Global.

Diversification Opportunities for CI Munro and CI Global

0.54

Correlation Coefficient

CI Munro  CI Global

Very weak diversification

The 3 months correlation between CMAG and CGAA is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CI Munro Alternative and CI Global Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Asset and CI Munro 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 CI Munro Alternative are associated (or correlated) with CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Asset has no effect on the direction of CI Munro i.e., CI Munro and CI Global go up and down completely randomly.

Pair Corralation between CI Munro and CI Global

Assuming the 90 days trading horizon CI Munro Alternative is expected to under-perform the CI Global. In addition to that, CI Munro is 2.32 times more volatile than CI Global Asset. It trades about -0.08 of its total potential returns per unit of risk. CI Global Asset is currently generating about -0.03 per unit of volatility. If you would invest  2,800  in CI Global Asset on December 29, 2024 and sell it today you would lose (40.00) from holding CI Global Asset or give up 1.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

CI Munro Alternative  vs.  CI Global Asset

CI Munro Alternative

Risk-Adjusted Performance

Very Weak

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

CI Global Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days CI Global Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CI Global is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CI Munro and CI Global

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

The idea behind CI Munro Alternative and CI Global Asset 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.