Correlation Between First Asset and CI Canada

Can any of the company-specific risk be diversified away by investing in both First Asset 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 First Asset and CI Canada 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 Canada Lifeco, you can compare the effects of market volatilities on First Asset 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 First Asset with a short position of CI Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and CI Canada.

Diversification Opportunities for First Asset and CI Canada

0.14

Correlation Coefficient

First Asset  CI Canada

Average diversification

The 3 months correlation between First and FLI is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Energy 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 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 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 First Asset i.e., First Asset and CI Canada go up and down completely randomly.

Pair Corralation between First Asset and CI Canada

Assuming the 90 days trading horizon First Asset Energy is expected to under-perform the CI Canada. In addition to that, First Asset is 1.01 times more volatile than CI Canada Lifeco. It trades about -0.01 of its total potential returns per unit of risk. CI Canada Lifeco is currently generating about 0.17 per unit of volatility. If you would invest  1,065  in CI Canada Lifeco on August 31, 2024 and sell it today you would earn a total of  130.00  from holding CI Canada Lifeco or generate 12.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

First Asset Energy  vs.  CI Canada Lifeco

First Asset Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Asset Energy has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Canada Lifeco

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canada Lifeco are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, CI Canada may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with First Asset and CI Canada

The main advantage of trading using opposite First Asset and CI Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Asset 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 First Asset Energy 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.