Correlation Between CIBC Conservative and Franklin Canadian

Can any of the company-specific risk be diversified away by investing in both CIBC Conservative and Franklin Canadian 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 CIBC Conservative and Franklin Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CIBC Conservative Fixed and Franklin Canadian Core, you can compare the effects of market volatilities on CIBC Conservative and Franklin Canadian 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 CIBC Conservative with a short position of Franklin Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIBC Conservative and Franklin Canadian.

Diversification Opportunities for CIBC Conservative and Franklin Canadian

0.17

Correlation Coefficient

CIBC Conservative  Franklin Canadian

Average diversification

The 3 months correlation between CIBC and Franklin is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CIBC Conservative Fixed and Franklin Canadian Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Canadian Core and CIBC Conservative 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 CIBC Conservative Fixed are associated (or correlated) with Franklin Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Canadian Core has no effect on the direction of CIBC Conservative i.e., CIBC Conservative and Franklin Canadian go up and down completely randomly.

Pair Corralation between CIBC Conservative and Franklin Canadian

Assuming the 90 days trading horizon CIBC Conservative Fixed is expected to generate 0.4 times more return on investment than Franklin Canadian. However, CIBC Conservative Fixed is 2.53 times less risky than Franklin Canadian. It trades about 0.06 of its potential returns per unit of risk. Franklin Canadian Core is currently generating about -0.01 per unit of risk. If you would invest  1,799  in CIBC Conservative Fixed on April 25, 2025 and sell it today you would earn a total of  8.00  from holding CIBC Conservative Fixed or generate 0.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CIBC Conservative Fixed  vs.  Franklin Canadian Core

CIBC Conservative Fixed

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Conservative Fixed are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CIBC Conservative is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Franklin Canadian Core

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Canadian Core has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Franklin Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CIBC Conservative and Franklin Canadian

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

The idea behind CIBC Conservative Fixed and Franklin Canadian Core 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.