Correlation Between Rubicon Organics and Canadian Imperial

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

By analyzing existing cross correlation between Rubicon Organics and Canadian Imperial Bank, you can compare the effects of market volatilities on Rubicon Organics and Canadian Imperial 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 Rubicon Organics with a short position of Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rubicon Organics and Canadian Imperial.

Diversification Opportunities for Rubicon Organics and Canadian Imperial

-0.38

Correlation Coefficient

Rubicon Organics  Canadian Imperial

Very good diversification

The 3 months correlation between Rubicon and Canadian is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and Canadian Imperial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank and Rubicon Organics 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 Rubicon Organics are associated (or correlated) with Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of Rubicon Organics i.e., Rubicon Organics and Canadian Imperial go up and down completely randomly.

Pair Corralation between Rubicon Organics and Canadian Imperial

Assuming the 90 days trading horizon Rubicon Organics is expected to generate 17.92 times more return on investment than Canadian Imperial. However, Rubicon Organics is 17.92 times more volatile than Canadian Imperial Bank. It trades about 0.05 of its potential returns per unit of risk. Canadian Imperial Bank is currently generating about 0.19 per unit of risk. If you would invest  42.00  in Rubicon Organics on September 25, 2024 and sell it today you would earn a total of  3.00  from holding Rubicon Organics or generate 7.14% return on investment over 90 days.

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

Rubicon Organics  vs.  Canadian Imperial Bank

Rubicon Organics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Rubicon Organics showed solid returns over the last few months and may actually be approaching a breakup point.

Canadian Imperial Bank

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Canadian Imperial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rubicon Organics and Canadian Imperial

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

The idea behind Rubicon Organics and Canadian Imperial Bank 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 Stocks Directory module to find actively traded stocks across global markets.