Correlation Between CI Preferred and IShares 1

Can any of the company-specific risk be diversified away by investing in both CI Preferred and IShares 1 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 Preferred and IShares 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CI Preferred Share and iShares 1 5 Year, you can compare the effects of market volatilities on CI Preferred and IShares 1 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 Preferred with a short position of IShares 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Preferred and IShares 1.

Diversification Opportunities for CI Preferred and IShares 1

0.68

Correlation Coefficient

CI Preferred  IShares 1

Poor diversification

The 3 months correlation between FPR and IShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CI Preferred Share and iShares 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 5 and CI Preferred 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 Preferred Share are associated (or correlated) with IShares 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 5 has no effect on the direction of CI Preferred i.e., CI Preferred and IShares 1 go up and down completely randomly.

Pair Corralation between CI Preferred and IShares 1

Assuming the 90 days trading horizon CI Preferred Share is expected to generate 2.34 times more return on investment than IShares 1. However, CI Preferred is 2.34 times more volatile than iShares 1 5 Year. It trades about 0.07 of its potential returns per unit of risk. iShares 1 5 Year is currently generating about 0.09 per unit of risk. If you would invest  1,967  in CI Preferred Share on October 10, 2024 and sell it today you would earn a total of  351.00  from holding CI Preferred Share or generate 17.84% return on investment over 90 days.

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

CI Preferred Share  vs.  iShares 1 5 Year

CI Preferred Share

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Preferred Share are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI Preferred is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

iShares 1 5

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 1 5 Year are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IShares 1 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 Preferred and IShares 1

The main advantage of trading using opposite CI Preferred and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Preferred position performs unexpectedly, IShares 1 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 IShares 1 will offset losses from the drop in IShares 1's long position.

The idea behind CI Preferred Share and iShares 1 5 Year 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.