Correlation Between CI MidCap and CI Canadian

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

By analyzing existing cross correlation between CI MidCap Dividend and CI Canadian Short Term, you can compare the effects of market volatilities on CI MidCap and CI Canadian 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 MidCap with a short position of CI Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI MidCap and CI Canadian.

Diversification Opportunities for CI MidCap and CI Canadian

0.19

Correlation Coefficient

CI MidCap  CI Canadian

Average diversification

The 3 months correlation between UMI and CAGS is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CI MidCap Dividend and CI Canadian Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canadian Short and CI MidCap 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 MidCap Dividend are associated (or correlated) with CI Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canadian Short has no effect on the direction of CI MidCap i.e., CI MidCap and CI Canadian go up and down completely randomly.

Pair Corralation between CI MidCap and CI Canadian

Assuming the 90 days trading horizon CI MidCap Dividend is expected to generate 5.47 times more return on investment than CI Canadian. However, CI MidCap is 5.47 times more volatile than CI Canadian Short Term. It trades about 0.14 of its potential returns per unit of risk. CI Canadian Short Term is currently generating about 0.08 per unit of risk. If you would invest  3,290  in CI MidCap Dividend on September 15, 2024 and sell it today you would earn a total of  258.00  from holding CI MidCap Dividend or generate 7.84% return on investment over 90 days.

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

CI MidCap Dividend  vs.  CI Canadian Short Term

CI MidCap Dividend

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI MidCap Dividend are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, CI MidCap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CI Canadian Short

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI Canadian Short Term are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI Canadian 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 MidCap and CI Canadian

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

The idea behind CI MidCap Dividend and CI Canadian Short Term 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.