Correlation Between Fidelity High and CIBC International

Can any of the company-specific risk be diversified away by investing in both Fidelity High and CIBC International 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 Fidelity High and CIBC International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity High Dividend and CIBC International Equity, you can compare the effects of market volatilities on Fidelity High and CIBC International 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 Fidelity High with a short position of CIBC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity High and CIBC International.

Diversification Opportunities for Fidelity High and CIBC International

0.21

Correlation Coefficient

Fidelity High  CIBC International

Modest diversification

The 3 months correlation between Fidelity and CIBC is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity High Dividend and CIBC International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC International Equity and Fidelity High 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 Fidelity High Dividend are associated (or correlated) with CIBC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC International Equity has no effect on the direction of Fidelity High i.e., Fidelity High and CIBC International go up and down completely randomly.

Pair Corralation between Fidelity High and CIBC International

Assuming the 90 days trading horizon Fidelity High Dividend is expected to generate 0.62 times more return on investment than CIBC International. However, Fidelity High Dividend is 1.6 times less risky than CIBC International. It trades about 0.09 of its potential returns per unit of risk. CIBC International Equity is currently generating about -0.03 per unit of risk. If you would invest  3,253  in Fidelity High Dividend on September 3, 2024 and sell it today you would earn a total of  93.00  from holding Fidelity High Dividend or generate 2.86% return on investment over 90 days.

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

Fidelity High Dividend  vs.  CIBC International Equity

Fidelity High Dividend

Risk-Adjusted Performance

7 of 100

OK

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

CIBC International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CIBC International Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CIBC International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fidelity High and CIBC International

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

The idea behind Fidelity High Dividend and CIBC International Equity 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.