Correlation Between CI First and IShares Global

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

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

Diversification Opportunities for CI First and IShares Global

-0.31

Correlation Coefficient

CI First  IShares Global

Very good diversification

The 3 months correlation between MXF and IShares is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CI First Asset and iShares Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Infra and CI First 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 First Asset are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Infra has no effect on the direction of CI First i.e., CI First and IShares Global go up and down completely randomly.

Pair Corralation between CI First and IShares Global

Assuming the 90 days trading horizon CI First Asset is expected to under-perform the IShares Global. In addition to that, CI First is 1.5 times more volatile than iShares Global Infrastructure. It trades about -0.06 of its total potential returns per unit of risk. iShares Global Infrastructure is currently generating about -0.07 per unit of volatility. If you would invest  5,169  in iShares Global Infrastructure on October 7, 2024 and sell it today you would lose (198.00) from holding iShares Global Infrastructure or give up 3.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

CI First Asset  vs.  iShares Global Infrastructure

CI First Asset

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares Global Infra

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CI First and IShares Global

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

The idea behind CI First Asset and iShares Global Infrastructure 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.