Correlation Between CI Financial and Hercules Metals

Can any of the company-specific risk be diversified away by investing in both CI Financial and Hercules Metals 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 CI Financial and Hercules Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CI Financial Corp and Hercules Metals Corp, you can compare the effects of market volatilities on CI Financial and Hercules Metals 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 CI Financial with a short position of Hercules Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Financial and Hercules Metals.

Diversification Opportunities for CI Financial and Hercules Metals

0.58

Correlation Coefficient

CI Financial  Hercules Metals

Very weak diversification

The 3 months correlation between CIX and Hercules is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and Hercules Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Metals Corp and CI Financial 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 CI Financial Corp are associated (or correlated) with Hercules Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Metals Corp has no effect on the direction of CI Financial i.e., CI Financial and Hercules Metals go up and down completely randomly.

Pair Corralation between CI Financial and Hercules Metals

Assuming the 90 days trading horizon CI Financial is expected to generate 25.41 times less return on investment than Hercules Metals. But when comparing it to its historical volatility, CI Financial Corp is 41.2 times less risky than Hercules Metals. It trades about 0.21 of its potential returns per unit of risk. Hercules Metals Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  62.00  in Hercules Metals Corp on April 24, 2025 and sell it today you would earn a total of  25.00  from holding Hercules Metals Corp or generate 40.32% return on investment over 90 days.

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

CI Financial Corp  vs.  Hercules Metals Corp

CI Financial Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Financial Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Hercules Metals Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Metals Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Hercules Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CI Financial and Hercules Metals

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

The idea behind CI Financial Corp and Hercules Metals Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.