Correlation Between CI Canadian and IShares Convertible

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

By analyzing existing cross correlation between CI Canadian Convertible and iShares Convertible Bond, you can compare the effects of market volatilities on CI Canadian and IShares Convertible 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 IShares Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Canadian and IShares Convertible.

Diversification Opportunities for CI Canadian and IShares Convertible

0.51

Correlation Coefficient

CI Canadian  IShares Convertible

Very weak diversification

The 3 months correlation between CXF and IShares is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CI Canadian Convertible and iShares Convertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Convertible Bond 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 Convertible are associated (or correlated) with IShares Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Convertible Bond has no effect on the direction of CI Canadian i.e., CI Canadian and IShares Convertible go up and down completely randomly.

Pair Corralation between CI Canadian and IShares Convertible

Assuming the 90 days trading horizon CI Canadian Convertible is expected to generate 1.77 times more return on investment than IShares Convertible. However, CI Canadian is 1.77 times more volatile than iShares Convertible Bond. It trades about 0.09 of its potential returns per unit of risk. iShares Convertible Bond is currently generating about 0.07 per unit of risk. If you would invest  976.00  in CI Canadian Convertible on September 5, 2024 and sell it today you would earn a total of  46.00  from holding CI Canadian Convertible or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

CI Canadian Convertible  vs.  iShares Convertible Bond

CI Canadian Convertible

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canadian Convertible are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, CI Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares Convertible Bond

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Convertible Bond are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, IShares Convertible is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CI Canadian and IShares Convertible

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

The idea behind CI Canadian Convertible and iShares Convertible Bond 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.