Correlation Between Vecima Networks and CI Financial

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

By analyzing existing cross correlation between Vecima Networks and CI Financial Corp, you can compare the effects of market volatilities on Vecima Networks and CI Financial 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 Vecima Networks with a short position of CI Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vecima Networks and CI Financial.

Diversification Opportunities for Vecima Networks and CI Financial

-0.88

Correlation Coefficient

Vecima Networks  CI Financial

Pay attention - limited upside

The 3 months correlation between Vecima and CIX is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vecima Networks and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial Corp and Vecima Networks 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 Vecima Networks are associated (or correlated) with CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of Vecima Networks i.e., Vecima Networks and CI Financial go up and down completely randomly.

Pair Corralation between Vecima Networks and CI Financial

Assuming the 90 days trading horizon Vecima Networks is expected to under-perform the CI Financial. But the stock apears to be less risky and, when comparing its historical volatility, Vecima Networks is 1.89 times less risky than CI Financial. The stock trades about -0.19 of its potential returns per unit of risk. The CI Financial Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,720  in CI Financial Corp on September 14, 2024 and sell it today you would earn a total of  1,382  from holding CI Financial Corp or generate 80.35% return on investment over 90 days.

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

Vecima Networks  vs.  CI Financial Corp

Vecima Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vecima Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CI Financial Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Financial Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vecima Networks and CI Financial

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

The idea behind Vecima Networks and CI Financial Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.