Correlation Between CIBC Equity and Dynamic Active

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

By analyzing existing cross correlation between CIBC Equity Index and Dynamic Active Global, you can compare the effects of market volatilities on CIBC Equity and Dynamic Active 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 Equity with a short position of Dynamic Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIBC Equity and Dynamic Active.

Diversification Opportunities for CIBC Equity and Dynamic Active

0.96

Correlation Coefficient

CIBC Equity  Dynamic Active

Almost no diversification

The 3 months correlation between CIBC and Dynamic is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Equity Index and Dynamic Active Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Global and CIBC Equity 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 Equity Index are associated (or correlated) with Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Global has no effect on the direction of CIBC Equity i.e., CIBC Equity and Dynamic Active go up and down completely randomly.

Pair Corralation between CIBC Equity and Dynamic Active

Assuming the 90 days trading horizon CIBC Equity Index is expected to generate 0.72 times more return on investment than Dynamic Active. However, CIBC Equity Index is 1.39 times less risky than Dynamic Active. It trades about -0.08 of its potential returns per unit of risk. Dynamic Active Global is currently generating about -0.07 per unit of risk. If you would invest  3,383  in CIBC Equity Index on December 22, 2024 and sell it today you would lose (162.00) from holding CIBC Equity Index or give up 4.79% of portfolio value over 90 days.

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

CIBC Equity Index  vs.  Dynamic Active Global

CIBC Equity Index

Risk-Adjusted Performance

Very Weak

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

Dynamic Active Global

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CIBC Equity and Dynamic Active

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

The idea behind CIBC Equity Index and Dynamic Active Global 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.