Correlation Between CIBC Qx and CIBC Sustainable

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

By analyzing existing cross correlation between CIBC Qx International and CIBC Sustainable Balanced, you can compare the effects of market volatilities on CIBC Qx and CIBC Sustainable 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 CIBC Qx with a short position of CIBC Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIBC Qx and CIBC Sustainable.

Diversification Opportunities for CIBC Qx and CIBC Sustainable

0.21

Correlation Coefficient

CIBC Qx  CIBC Sustainable

Modest diversification

The 3 months correlation between CIBC and CIBC is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Qx International and CIBC Sustainable Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Sustainable Balanced and CIBC Qx 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 CIBC Qx International are associated (or correlated) with CIBC Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Sustainable Balanced has no effect on the direction of CIBC Qx i.e., CIBC Qx and CIBC Sustainable go up and down completely randomly.

Pair Corralation between CIBC Qx and CIBC Sustainable

Assuming the 90 days trading horizon CIBC Qx International is expected to under-perform the CIBC Sustainable. In addition to that, CIBC Qx is 1.7 times more volatile than CIBC Sustainable Balanced. It trades about -0.02 of its total potential returns per unit of risk. CIBC Sustainable Balanced is currently generating about 0.14 per unit of volatility. If you would invest  2,022  in CIBC Sustainable Balanced on December 30, 2024 and sell it today you would earn a total of  192.00  from holding CIBC Sustainable Balanced or generate 9.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CIBC Qx International  vs.  CIBC Sustainable Balanced

CIBC Qx International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CIBC Qx International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CIBC Qx is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CIBC Sustainable Balanced

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Sustainable Balanced are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, CIBC Sustainable may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CIBC Qx and CIBC Sustainable

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

The idea behind CIBC Qx International and CIBC Sustainable Balanced 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.