Correlation Between First Asset and CI Munro

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

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

Diversification Opportunities for First Asset and CI Munro

0.11

Correlation Coefficient

First Asset  CI Munro

Average diversification

The 3 months correlation between First and CMAG is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Energy and CI Munro Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Munro Alternative and First Asset 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 First Asset Energy are associated (or correlated) with CI Munro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Munro Alternative has no effect on the direction of First Asset i.e., First Asset and CI Munro go up and down completely randomly.

Pair Corralation between First Asset and CI Munro

Assuming the 90 days trading horizon First Asset is expected to generate 10.1 times less return on investment than CI Munro. In addition to that, First Asset is 1.14 times more volatile than CI Munro Alternative. It trades about 0.02 of its total potential returns per unit of risk. CI Munro Alternative is currently generating about 0.18 per unit of volatility. If you would invest  3,378  in CI Munro Alternative on September 12, 2024 and sell it today you would earn a total of  384.00  from holding CI Munro Alternative or generate 11.37% return on investment over 90 days.

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

First Asset Energy  vs.  CI Munro Alternative

First Asset Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, First Asset is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI Munro Alternative

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI Munro Alternative are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Munro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Asset and CI Munro

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

The idea behind First Asset Energy and CI Munro Alternative 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.