Correlation Between Global X and CI Canada

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

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

Diversification Opportunities for Global X and CI Canada

0.59

Correlation Coefficient

Global X  CI Canada

Very weak diversification

The 3 months correlation between Global and FLI is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Global X Natural and CI Canada Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canada Lifeco and Global X 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 Global X Natural are associated (or correlated) with CI Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canada Lifeco has no effect on the direction of Global X i.e., Global X and CI Canada go up and down completely randomly.

Pair Corralation between Global X and CI Canada

Assuming the 90 days trading horizon Global X Natural is expected to generate 1.58 times more return on investment than CI Canada. However, Global X is 1.58 times more volatile than CI Canada Lifeco. It trades about 0.14 of its potential returns per unit of risk. CI Canada Lifeco is currently generating about 0.08 per unit of risk. If you would invest  820.00  in Global X Natural on December 29, 2024 and sell it today you would earn a total of  135.00  from holding Global X Natural or generate 16.46% return on investment over 90 days.

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

Global X Natural  vs.  CI Canada Lifeco

Global X Natural

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Natural are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global X displayed solid returns over the last few months and may actually be approaching a breakup point.

CI Canada Lifeco

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canada Lifeco are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, CI Canada is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global X and CI Canada

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

The idea behind Global X Natural and CI Canada Lifeco 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..