Correlation Between Canadian Imperial and Dun Bradstreet

Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Dun Bradstreet 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 Dun Bradstreet 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 Dun Bradstreet Holdings, you can compare the effects of market volatilities on Canadian Imperial and Dun Bradstreet 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 Dun Bradstreet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Dun Bradstreet.

Diversification Opportunities for Canadian Imperial and Dun Bradstreet

-0.16

Correlation Coefficient

Canadian Imperial  Dun Bradstreet

Good diversification

The 3 months correlation between Canadian and Dun is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Dun Bradstreet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dun Bradstreet Holdings 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 Dun Bradstreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dun Bradstreet Holdings has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Dun Bradstreet go up and down completely randomly.

Pair Corralation between Canadian Imperial and Dun Bradstreet

Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to generate 0.55 times more return on investment than Dun Bradstreet. However, Canadian Imperial Bank is 1.8 times less risky than Dun Bradstreet. It trades about 0.13 of its potential returns per unit of risk. Dun Bradstreet Holdings is currently generating about 0.02 per unit of risk. If you would invest  4,583  in Canadian Imperial Bank on February 20, 2024 and sell it today you would earn a total of  357.00  from holding Canadian Imperial Bank or generate 7.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Canadian Imperial Bank  vs.  Dun Bradstreet Holdings

Canadian Imperial Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Canadian Imperial may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Dun Bradstreet Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dun Bradstreet Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dun Bradstreet is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Canadian Imperial and Dun Bradstreet

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

The idea behind Canadian Imperial Bank and Dun Bradstreet Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.