Correlation Between CI Canadian and Global X

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

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

Diversification Opportunities for CI Canadian and Global X

0.99

Correlation Coefficient

CI Canadian  Global X

No risk reduction

The 3 months correlation between CIC and Global is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding CI Canadian Banks and Global X Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Enhanced and CI Canadian 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 CI Canadian Banks are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Enhanced has no effect on the direction of CI Canadian i.e., CI Canadian and Global X go up and down completely randomly.

Pair Corralation between CI Canadian and Global X

Assuming the 90 days trading horizon CI Canadian is expected to generate 1.38 times less return on investment than Global X. But when comparing it to its historical volatility, CI Canadian Banks is 1.52 times less risky than Global X. It trades about 0.4 of its potential returns per unit of risk. Global X Enhanced is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  2,284  in Global X Enhanced on September 2, 2024 and sell it today you would earn a total of  353.00  from holding Global X Enhanced or generate 15.46% return on investment over 90 days.

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

CI Canadian Banks  vs.  Global X Enhanced

CI Canadian Banks

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canadian Banks are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, CI Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X Enhanced

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Enhanced are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global X displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CI Canadian and Global X

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

The idea behind CI Canadian Banks and Global X Enhanced 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.