Correlation Between CIBC Sustainable and First Asset

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

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

Diversification Opportunities for CIBC Sustainable and First Asset

0.38

Correlation Coefficient

CIBC Sustainable  First Asset

Weak diversification

The 3 months correlation between CIBC and First is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Sustainable Balanced and First Asset Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Energy and CIBC Sustainable 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 Sustainable Balanced are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Energy has no effect on the direction of CIBC Sustainable i.e., CIBC Sustainable and First Asset go up and down completely randomly.

Pair Corralation between CIBC Sustainable and First Asset

Assuming the 90 days trading horizon CIBC Sustainable is expected to generate 1.06 times less return on investment than First Asset. But when comparing it to its historical volatility, CIBC Sustainable Balanced is 1.03 times less risky than First Asset. It trades about 0.14 of its potential returns per unit of risk. First Asset Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  516.00  in First Asset Energy on December 29, 2024 and sell it today you would earn a total of  52.00  from holding First Asset Energy or generate 10.08% return on investment over 90 days.

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

CIBC Sustainable Balanced  vs.  First Asset Energy

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.

First Asset Energy

Risk-Adjusted Performance

Good

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

Pair Trading with CIBC Sustainable and First Asset

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

The idea behind CIBC Sustainable Balanced and First Asset Energy 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..