Correlation Between Canadian Imperial and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Wells Fargo 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 Wells Fargo 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 Wells Fargo, you can compare the effects of market volatilities on Canadian Imperial and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Wells Fargo.
Diversification Opportunities for Canadian Imperial and Wells Fargo
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Canadian and Wells is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Wells Fargo go up and down completely randomly.
Pair Corralation between Canadian Imperial and Wells Fargo
Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to under-perform the Wells Fargo. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Imperial Bank is 1.27 times less risky than Wells Fargo. The stock trades about -0.21 of its potential returns per unit of risk. The Wells Fargo is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,730 in Wells Fargo on January 20, 2024 and sell it today you would earn a total of 305.00 from holding Wells Fargo or generate 5.32% 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. Wells Fargo
Performance |
| Timeline |
| Canadian Imperial Bank |
| Wells Fargo |
Canadian Imperial and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Wells Fargo
The main advantage of trading using opposite Canadian Imperial and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo'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 |
| Wells Fargo vs. Bank of America | Wells Fargo vs. JPMorgan Chase Co | Wells Fargo vs. Toronto Dominion Bank | Wells Fargo vs. Nu Holdings |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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