Correlation Between CI High and Purpose High

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

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

Diversification Opportunities for CI High and Purpose High

0.3

Correlation Coefficient

CI High  Purpose High

Weak diversification

The 3 months correlation between CSAV and Purpose is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CI High Interest and Purpose High Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose High Interest and CI High 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 High Interest are associated (or correlated) with Purpose High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose High Interest has no effect on the direction of CI High i.e., CI High and Purpose High go up and down completely randomly.

Pair Corralation between CI High and Purpose High

Assuming the 90 days trading horizon CI High is expected to generate 7.49 times less return on investment than Purpose High. But when comparing it to its historical volatility, CI High Interest is 21.87 times less risky than Purpose High. It trades about 0.43 of its potential returns per unit of risk. Purpose High Interest is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,834  in Purpose High Interest on September 24, 2024 and sell it today you would earn a total of  2,178  from holding Purpose High Interest or generate 76.85% return on investment over 90 days.

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

CI High Interest  vs.  Purpose High Interest

CI High Interest

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CI High Interest are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI High is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Purpose High Interest

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose High Interest are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Purpose High is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CI High and Purpose High

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

The idea behind CI High Interest and Purpose High Interest 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.