Correlation Between Canadian Imperial and Exxon

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

Diversification Opportunities for Canadian Imperial and Exxon

0.5

Correlation Coefficient

Canadian Imperial  Exxon

Very weak diversification

The 3 months correlation between Canadian and Exxon is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and EXXON MOBIL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXXON MOBIL CDR 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXXON MOBIL CDR has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Exxon go up and down completely randomly.

Pair Corralation between Canadian Imperial and Exxon

Assuming the 90 days trading horizon Canadian Imperial Bank is expected to generate 0.2 times more return on investment than Exxon. However, Canadian Imperial Bank is 5.08 times less risky than Exxon. It trades about 0.19 of its potential returns per unit of risk. EXXON MOBIL CDR is currently generating about 0.02 per unit of risk. If you would invest  2,464  in Canadian Imperial Bank on April 23, 2025 and sell it today you would earn a total of  84.00  from holding Canadian Imperial Bank or generate 3.41% return on investment over 90 days.

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

Canadian Imperial Bank  vs.  EXXON MOBIL CDR

Canadian Imperial Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Canadian Imperial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

EXXON MOBIL CDR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EXXON MOBIL CDR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Exxon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Canadian Imperial and Exxon

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

The idea behind Canadian Imperial Bank and EXXON MOBIL CDR 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.