Correlation Between Canadian Imperial and 1st Capital
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and 1st Capital 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 1st Capital 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 1st Capital Bank, you can compare the effects of market volatilities on Canadian Imperial and 1st Capital 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 1st Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and 1st Capital.
Diversification Opportunities for Canadian Imperial and 1st Capital
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and 1st is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and 1st Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Capital Bank 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 1st Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Capital Bank has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and 1st Capital go up and down completely randomly.
Pair Corralation between Canadian Imperial and 1st Capital
Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to generate 1.44 times more return on investment than 1st Capital. However, Canadian Imperial is 1.44 times more volatile than 1st Capital Bank. It trades about 0.11 of its potential returns per unit of risk. 1st Capital Bank is currently generating about 0.02 per unit of risk. If you would invest 3,840 in Canadian Imperial Bank on January 24, 2024 and sell it today you would earn a total of 962.00 from holding Canadian Imperial Bank or generate 25.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. 1st Capital Bank
Performance |
| Timeline |
| Canadian Imperial Bank |
| 1st Capital Bank |
Canadian Imperial and 1st Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and 1st Capital
The main advantage of trading using opposite Canadian Imperial and 1st Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, 1st Capital 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 1st Capital will offset losses from the drop in 1st Capital'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 |
| 1st Capital vs. Allspring Global Dividend | 1st Capital vs. BNY Mellon High | 1st Capital vs. Pioneer High Income | 1st Capital vs. Allspring Utilities And |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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