Correlation Between National Bank and CI Financial
Can any of the company-specific risk be diversified away by investing in both National Bank and CI Financial 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 National Bank and CI Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and CI Financial Corp, you can compare the effects of market volatilities on National Bank and CI Financial 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 National Bank with a short position of CI Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and CI Financial.
Diversification Opportunities for National Bank and CI Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between National and CIX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial Corp and National Bank 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 National Bank of are associated (or correlated) with CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of National Bank i.e., National Bank and CI Financial go up and down completely randomly.
Pair Corralation between National Bank and CI Financial
Assuming the 90 days horizon National Bank is expected to generate 6.55 times less return on investment than CI Financial. But when comparing it to its historical volatility, National Bank of is 4.97 times less risky than CI Financial. It trades about 0.2 of its potential returns per unit of risk. CI Financial Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,711 in CI Financial Corp on September 5, 2024 and sell it today you would earn a total of 1,396 from holding CI Financial Corp or generate 81.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
National Bank of vs. CI Financial Corp
Performance |
Timeline |
National Bank |
CI Financial Corp |
National Bank and CI Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Bank and CI Financial
The main advantage of trading using opposite National Bank and CI Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, CI Financial 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 Financial will offset losses from the drop in CI Financial's long position.National Bank vs. Canadian Imperial Bank | National Bank vs. Bank of Montreal | National Bank vs. Royal Bank of | National Bank vs. Bank of Nova |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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