Correlation Between Canadian Imperial and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Barclays PLC 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 Canadian Imperial and Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Imperial Bank and Barclays PLC ADR, you can compare the effects of market volatilities on Canadian Imperial and Barclays PLC 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 Canadian Imperial with a short position of Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Barclays PLC.
Diversification Opportunities for Canadian Imperial and Barclays PLC
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Canadian and Barclays is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Barclays PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC ADR and Canadian Imperial 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 Canadian Imperial Bank are associated (or correlated) with Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC ADR has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Barclays PLC go up and down completely randomly.
Pair Corralation between Canadian Imperial and Barclays PLC
Allowing for the 90-day total investment horizon Canadian Imperial is expected to generate 4.82 times less return on investment than Barclays PLC. But when comparing it to its historical volatility, Canadian Imperial Bank is 1.43 times less risky than Barclays PLC. It trades about 0.08 of its potential returns per unit of risk. Barclays PLC ADR is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 824.00 in Barclays PLC ADR on January 24, 2024 and sell it today you would earn a total of 128.00 from holding Barclays PLC ADR or generate 15.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. Barclays PLC ADR
Performance |
| Timeline |
| Canadian Imperial Bank |
| Barclays PLC ADR |
Canadian Imperial and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Barclays PLC
The main advantage of trading using opposite Canadian Imperial and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Barclays PLC 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.| Canadian Imperial vs. Bank of Montreal | Canadian Imperial vs. Toronto Dominion Bank | Canadian Imperial vs. Royal Bank of | Canadian Imperial vs. Citigroup |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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