Correlation Between Invesco 1 and CI Canadian

Can any of the company-specific risk be diversified away by investing in both Invesco 1 and CI Canadian 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 Invesco 1 and CI Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Invesco 1 5 Year and CI Canadian Short Term, you can compare the effects of market volatilities on Invesco 1 and CI Canadian 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 Invesco 1 with a short position of CI Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco 1 and CI Canadian.

Diversification Opportunities for Invesco 1 and CI Canadian

0.92

Correlation Coefficient

Invesco 1  CI Canadian

Almost no diversification

The 3 months correlation between Invesco and CAGS is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Invesco 1 5 Year and CI Canadian Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canadian Short and Invesco 1 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 Invesco 1 5 Year are associated (or correlated) with CI Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canadian Short has no effect on the direction of Invesco 1 i.e., Invesco 1 and CI Canadian go up and down completely randomly.

Pair Corralation between Invesco 1 and CI Canadian

Assuming the 90 days trading horizon Invesco 1 is expected to generate 68.0 times less return on investment than CI Canadian. But when comparing it to its historical volatility, Invesco 1 5 Year is 1.29 times less risky than CI Canadian. It trades about 0.0 of its potential returns per unit of risk. CI Canadian Short Term is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,722  in CI Canadian Short Term on October 1, 2024 and sell it today you would earn a total of  6.00  from holding CI Canadian Short Term or generate 0.13% return on investment over 90 days.

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

Invesco 1 5 Year  vs.  CI Canadian Short Term

Invesco 1 5

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco 1 5 Year are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Invesco 1 is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

CI Canadian Short

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canadian Short Term are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Invesco 1 and CI Canadian

The main advantage of trading using opposite Invesco 1 and CI Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco 1 position performs unexpectedly, CI Canadian 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 Canadian will offset losses from the drop in CI Canadian's long position.

The idea behind Invesco 1 5 Year and CI Canadian Short Term 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.