Correlation Between Dynamic Active and CI ONE

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

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

Diversification Opportunities for Dynamic Active and CI ONE

0.94

Correlation Coefficient

Dynamic Active  CI ONE

Almost no diversification

The 3 months correlation between Dynamic and ONEQ is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Active Global and CI ONE Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI ONE Global and Dynamic Active 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 Dynamic Active Global are associated (or correlated) with CI ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI ONE Global has no effect on the direction of Dynamic Active i.e., Dynamic Active and CI ONE go up and down completely randomly.

Pair Corralation between Dynamic Active and CI ONE

Assuming the 90 days trading horizon Dynamic Active Global is expected to generate 1.58 times more return on investment than CI ONE. However, Dynamic Active is 1.58 times more volatile than CI ONE Global. It trades about 0.21 of its potential returns per unit of risk. CI ONE Global is currently generating about 0.15 per unit of risk. If you would invest  6,091  in Dynamic Active Global on September 15, 2024 and sell it today you would earn a total of  861.00  from holding Dynamic Active Global or generate 14.14% return on investment over 90 days.

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

Dynamic Active Global  vs.  CI ONE Global

Dynamic Active Global

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Active Global are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Dynamic Active displayed solid returns over the last few months and may actually be approaching a breakup point.

CI ONE Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI ONE Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI ONE is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dynamic Active and CI ONE

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

The idea behind Dynamic Active Global and CI ONE Global 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.