Correlation Between Canadian Imperial and Bank of New York
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Bank of New York 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 Bank of New York 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 Bank of New, you can compare the effects of market volatilities on Canadian Imperial and Bank of New York 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 Bank of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Bank of New York.
Diversification Opportunities for Canadian Imperial and Bank of New York
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canadian and Bank is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Bank of New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York 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 Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Bank of New York go up and down completely randomly.
Pair Corralation between Canadian Imperial and Bank of New York
Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to generate 0.99 times more return on investment than Bank of New York. However, Canadian Imperial Bank is 1.01 times less risky than Bank of New York. It trades about 0.09 of its potential returns per unit of risk. Bank of New is currently generating about 0.08 per unit of risk. If you would invest 4,517 in Canadian Imperial Bank on January 26, 2024 and sell it today you would earn a total of 237.00 from holding Canadian Imperial Bank or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. Bank of New
Performance |
| Timeline |
| Canadian Imperial Bank |
| Bank of New York |
Canadian Imperial and Bank of New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Bank of New York
The main advantage of trading using opposite Canadian Imperial and Bank of New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Bank of New York 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 Bank of New York will offset losses from the drop in Bank of New York'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 |
| Bank of New York vs. Federated Premier Municipal | Bank of New York vs. Blackrock Muniyield | Bank of New York vs. Diamond Hill Investment | Bank of New York vs. NXG NextGen Infrastructure |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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