Correlation Between Canadian Imperial and Mfs Emerging
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Mfs Emerging 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 Mfs Emerging 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 Mfs Emerging Markets, you can compare the effects of market volatilities on Canadian Imperial and Mfs Emerging 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 Mfs Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Mfs Emerging.
Diversification Opportunities for Canadian Imperial and Mfs Emerging
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canadian and Mfs is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Mfs Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Emerging Markets 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 Mfs Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Emerging Markets has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Mfs Emerging go up and down completely randomly.
Pair Corralation between Canadian Imperial and Mfs Emerging
Assuming the 90 days horizon Canadian Imperial Bank is expected to generate 1.55 times more return on investment than Mfs Emerging. However, Canadian Imperial is 1.55 times more volatile than Mfs Emerging Markets. It trades about -0.14 of its potential returns per unit of risk. Mfs Emerging Markets is currently generating about -0.37 per unit of risk. If you would invest 6,657 in Canadian Imperial Bank on January 19, 2024 and sell it today you would lose (155.00) from holding Canadian Imperial Bank or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. Mfs Emerging Markets
Performance |
| Timeline |
| Canadian Imperial Bank |
| Mfs Emerging Markets |
Canadian Imperial and Mfs Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Mfs Emerging
The main advantage of trading using opposite Canadian Imperial and Mfs Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Mfs Emerging 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 Mfs Emerging will offset losses from the drop in Mfs Emerging's long position.The idea behind Canadian Imperial Bank and Mfs Emerging Markets 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.| Mfs Emerging vs. HUMANA INC | Mfs Emerging vs. Aquagold International | Mfs Emerging vs. Thrivent High Yield | Mfs Emerging vs. Morningstar Unconstrained Allocation |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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