Correlation Between CI Financial and Great West
Can any of the company-specific risk be diversified away by investing in both CI Financial and Great West 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 Financial and Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Financial Corp and Great West Lifeco, you can compare the effects of market volatilities on CI Financial and Great West 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 Financial with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Financial and Great West.
Diversification Opportunities for CI Financial and Great West
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CIX and Great is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco and CI Financial 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 Financial Corp are associated (or correlated) with Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifeco has no effect on the direction of CI Financial i.e., CI Financial and Great West go up and down completely randomly.
Pair Corralation between CI Financial and Great West
Assuming the 90 days trading horizon CI Financial Corp is expected to generate 2.9 times more return on investment than Great West. However, CI Financial is 2.9 times more volatile than Great West Lifeco. It trades about 0.11 of its potential returns per unit of risk. Great West Lifeco is currently generating about 0.13 per unit of risk. If you would invest 919.00 in CI Financial Corp on September 10, 2024 and sell it today you would earn a total of 2,193 from holding CI Financial Corp or generate 238.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
CI Financial Corp vs. Great West Lifeco
Performance |
Timeline |
CI Financial Corp |
Great West Lifeco |
CI Financial and Great West Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CI Financial and Great West
The main advantage of trading using opposite CI Financial and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Financial position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.CI Financial vs. E L Financial Corp | CI Financial vs. Fairfax Financial Holdings | CI Financial vs. Fairfax Fin Hld | CI Financial vs. Fairfax Financial Holdings |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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