Correlation Between Purpose Monthly and CI Global

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

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

Diversification Opportunities for Purpose Monthly and CI Global

0.85

Correlation Coefficient

Purpose Monthly  CI Global

Very poor diversification

The 3 months correlation between Purpose and CGAA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Monthly Income and CI Global Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Asset and Purpose Monthly 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 Purpose Monthly Income are associated (or correlated) with CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Asset has no effect on the direction of Purpose Monthly i.e., Purpose Monthly and CI Global go up and down completely randomly.

Pair Corralation between Purpose Monthly and CI Global

Assuming the 90 days trading horizon Purpose Monthly is expected to generate 1.43 times less return on investment than CI Global. But when comparing it to its historical volatility, Purpose Monthly Income is 1.84 times less risky than CI Global. It trades about 0.16 of its potential returns per unit of risk. CI Global Asset is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,683  in CI Global Asset on September 3, 2024 and sell it today you would earn a total of  116.00  from holding CI Global Asset or generate 4.32% return on investment over 90 days.

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

Purpose Monthly Income  vs.  CI Global Asset

Purpose Monthly Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Monthly Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Purpose Monthly is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI Global Asset

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Asset are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI 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 Purpose Monthly and CI Global

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

The idea behind Purpose Monthly Income and CI Global Asset 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.