Correlation Between CI Financial and KDA

Can any of the company-specific risk be diversified away by investing in both CI Financial and KDA 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 KDA 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 KDA Group, you can compare the effects of market volatilities on CI Financial and KDA 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 KDA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Financial and KDA.

Diversification Opportunities for CI Financial and KDA

-0.25

Correlation Coefficient

CI Financial  KDA

Very good diversification

The 3 months correlation between CIX and KDA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group 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 KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of CI Financial i.e., CI Financial and KDA go up and down completely randomly.

Pair Corralation between CI Financial and KDA

Assuming the 90 days trading horizon CI Financial Corp is expected to generate 0.66 times more return on investment than KDA. However, CI Financial Corp is 1.51 times less risky than KDA. It trades about 0.26 of its potential returns per unit of risk. KDA Group is currently generating about 0.03 per unit of risk. If you would invest  1,720  in CI Financial Corp on September 15, 2024 and sell it today you would earn a total of  1,384  from holding CI Financial Corp or generate 80.47% return on investment over 90 days.

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

CI Financial Corp  vs.  KDA Group

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.

KDA Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KDA Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, KDA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CI Financial and KDA

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

The idea behind CI Financial Corp and KDA Group 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.