Correlation Between Global X and CIBC Equity

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Can any of the company-specific risk be diversified away by investing in both Global X and CIBC Equity 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 Global X and CIBC Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Canadian and CIBC Equity Index, you can compare the effects of market volatilities on Global X and CIBC Equity 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 Global X with a short position of CIBC Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and CIBC Equity.

Diversification Opportunities for Global X and CIBC Equity

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Global and CIBC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Global X Canadian and CIBC Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Equity Index and Global X 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 Global X Canadian are associated (or correlated) with CIBC Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Equity Index has no effect on the direction of Global X i.e., Global X and CIBC Equity go up and down completely randomly.

Pair Corralation between Global X and CIBC Equity

Assuming the 90 days trading horizon Global X is expected to generate 2.21 times less return on investment than CIBC Equity. But when comparing it to its historical volatility, Global X Canadian is 1.34 times less risky than CIBC Equity. It trades about 0.16 of its potential returns per unit of risk. CIBC Equity Index is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,948  in CIBC Equity Index on April 23, 2025 and sell it today you would earn a total of  471.00  from holding CIBC Equity Index or generate 15.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Global X Canadian  vs.  CIBC Equity Index

 Performance 
       Timeline  
Global X Canadian 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Global X Canadian are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in August 2025.
CIBC Equity Index 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Equity Index are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, CIBC Equity displayed solid returns over the last few months and may actually be approaching a breakup point.

Global X and CIBC Equity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global X and CIBC Equity

The main advantage of trading using opposite Global X and CIBC Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, CIBC Equity 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 CIBC Equity will offset losses from the drop in CIBC Equity's long position.
The idea behind Global X Canadian and CIBC Equity Index 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.
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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