Correlation Between CDN IMPERIAL and MUENCHRUECKUNSADR

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

By analyzing existing cross correlation between CDN IMPERIAL BANK and MUENCHRUECKUNSADR 110, you can compare the effects of market volatilities on CDN IMPERIAL and MUENCHRUECKUNSADR 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 CDN IMPERIAL with a short position of MUENCHRUECKUNSADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and MUENCHRUECKUNSADR.

Diversification Opportunities for CDN IMPERIAL and MUENCHRUECKUNSADR

-0.32

Correlation Coefficient

CDN IMPERIAL  MUENCHRUECKUNSADR

Very good diversification

The 3 months correlation between CDN and MUENCHRUECKUNSADR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and MUENCHRUECKUNSADR 110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUENCHRUECKUNSADR 110 and CDN IMPERIAL 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 CDN IMPERIAL BANK are associated (or correlated) with MUENCHRUECKUNSADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUENCHRUECKUNSADR 110 has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and MUENCHRUECKUNSADR go up and down completely randomly.

Pair Corralation between CDN IMPERIAL and MUENCHRUECKUNSADR

Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.41 times more return on investment than MUENCHRUECKUNSADR. However, CDN IMPERIAL BANK is 2.47 times less risky than MUENCHRUECKUNSADR. It trades about 0.34 of its potential returns per unit of risk. MUENCHRUECKUNSADR 110 is currently generating about 0.02 per unit of risk. If you would invest  5,131  in CDN IMPERIAL BANK on September 3, 2024 and sell it today you would earn a total of  988.00  from holding CDN IMPERIAL BANK or generate 19.26% return on investment over 90 days.

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

CDN IMPERIAL BANK  vs.  MUENCHRUECKUNSADR 110

CDN IMPERIAL BANK

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CDN IMPERIAL BANK are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward indicators, CDN IMPERIAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

MUENCHRUECKUNSADR 110

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MUENCHRUECKUNSADR 110 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MUENCHRUECKUNSADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CDN IMPERIAL and MUENCHRUECKUNSADR

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

The idea behind CDN IMPERIAL BANK and MUENCHRUECKUNSADR 110 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.