Correlation Between CI Global and CI Europe

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

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

Diversification Opportunities for CI Global and CI Europe

0.55

Correlation Coefficient

CI Global  CI Europe

Very weak diversification

The 3 months correlation between FSF and EHE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Financial and CI Europe Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Europe Hedged and CI Global 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 Global Financial are associated (or correlated) with CI Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Europe Hedged has no effect on the direction of CI Global i.e., CI Global and CI Europe go up and down completely randomly.

Pair Corralation between CI Global and CI Europe

Assuming the 90 days trading horizon CI Global Financial is expected to generate 1.11 times more return on investment than CI Europe. However, CI Global is 1.11 times more volatile than CI Europe Hedged. It trades about 0.25 of its potential returns per unit of risk. CI Europe Hedged is currently generating about 0.16 per unit of risk. If you would invest  2,870  in CI Global Financial on April 20, 2025 and sell it today you would earn a total of  467.00  from holding CI Global Financial or generate 16.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

CI Global Financial  vs.  CI Europe Hedged

CI Global Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Financial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, CI Global displayed solid returns over the last few months and may actually be approaching a breakup point.

CI Europe Hedged

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI Europe Hedged are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, CI Europe may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CI Global and CI Europe

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

The idea behind CI Global Financial and CI Europe Hedged 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.