Correlation Between CI Financial and Plaza Retail

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

Diversification Opportunities for CI Financial and Plaza Retail

-0.86

Correlation Coefficient

CI Financial  Plaza Retail

Pay attention - limited upside

The 3 months correlation between CIX and Plaza is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT 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 Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of CI Financial i.e., CI Financial and Plaza Retail go up and down completely randomly.

Pair Corralation between CI Financial and Plaza Retail

Assuming the 90 days trading horizon CI Financial Corp is expected to generate 5.93 times more return on investment than Plaza Retail. However, CI Financial is 5.93 times more volatile than Plaza Retail REIT. It trades about 0.24 of its potential returns per unit of risk. Plaza Retail REIT is currently generating about -0.19 per unit of risk. If you would invest  1,788  in CI Financial Corp on September 23, 2024 and sell it today you would earn a total of  1,298  from holding CI Financial Corp or generate 72.6% return on investment over 90 days.

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

CI Financial Corp  vs.  Plaza Retail REIT

CI Financial Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Financial Corp are ranked lower than 18 (%) 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.

Plaza Retail REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plaza Retail REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CI Financial and Plaza Retail

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

The idea behind CI Financial Corp and Plaza Retail REIT 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.