Correlation Between Desjardins and CI Global

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

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

Diversification Opportunities for Desjardins and CI Global

0.91

Correlation Coefficient

Desjardins  CI Global

Almost no diversification

The 3 months correlation between Desjardins and CLML is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins RI USA and CI Global Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Climate and Desjardins 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 Desjardins RI USA 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 Climate has no effect on the direction of Desjardins i.e., Desjardins and CI Global go up and down completely randomly.

Pair Corralation between Desjardins and CI Global

Assuming the 90 days trading horizon Desjardins RI USA is expected to generate 0.67 times more return on investment than CI Global. However, Desjardins RI USA is 1.48 times less risky than CI Global. It trades about 0.14 of its potential returns per unit of risk. CI Global Climate is currently generating about -0.07 per unit of risk. If you would invest  4,448  in Desjardins RI USA on September 22, 2024 and sell it today you would earn a total of  104.00  from holding Desjardins RI USA or generate 2.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Desjardins RI USA  vs.  CI Global Climate

Desjardins RI USA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Desjardins RI USA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Desjardins may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CI Global Climate

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Climate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Desjardins and CI Global

The main advantage of trading using opposite Desjardins and CI Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins 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 Desjardins RI USA and CI Global Climate 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.