Correlation Between Guardian and CIBC Global

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

By analyzing existing cross correlation between Guardian i3 Global and CIBC Global Growth, you can compare the effects of market volatilities on Guardian and CIBC 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 Guardian with a short position of CIBC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian and CIBC Global.

Diversification Opportunities for Guardian and CIBC Global

0.56

Correlation Coefficient

Guardian  CIBC Global

Very weak diversification

The 3 months correlation between Guardian and CIBC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Guardian i3 Global and CIBC Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Global Growth and Guardian 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 Guardian i3 Global are associated (or correlated) with CIBC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Global Growth has no effect on the direction of Guardian i.e., Guardian and CIBC Global go up and down completely randomly.

Pair Corralation between Guardian and CIBC Global

Assuming the 90 days trading horizon Guardian i3 Global is expected to under-perform the CIBC Global. In addition to that, Guardian is 1.74 times more volatile than CIBC Global Growth. It trades about -0.03 of its total potential returns per unit of risk. CIBC Global Growth is currently generating about -0.02 per unit of volatility. If you would invest  3,082  in CIBC Global Growth on December 2, 2024 and sell it today you would lose (25.00) from holding CIBC Global Growth or give up 0.81% of portfolio value over 90 days.

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

Guardian i3 Global  vs.  CIBC Global Growth

Guardian i3 Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guardian i3 Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Guardian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CIBC Global Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Guardian and CIBC Global

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

The idea behind Guardian i3 Global and CIBC Global Growth 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.