Correlation Between Purpose Diversified and CIBC Core

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

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

Diversification Opportunities for Purpose Diversified and CIBC Core

0.59

Correlation Coefficient

Purpose Diversified  CIBC Core

Very weak diversification

The 3 months correlation between Purpose and CIBC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Diversified Real and CIBC Core Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Core Fixed and Purpose Diversified 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 Purpose Diversified Real are associated (or correlated) with CIBC Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Core Fixed has no effect on the direction of Purpose Diversified i.e., Purpose Diversified and CIBC Core go up and down completely randomly.

Pair Corralation between Purpose Diversified and CIBC Core

Assuming the 90 days trading horizon Purpose Diversified Real is expected to generate 4.31 times more return on investment than CIBC Core. However, Purpose Diversified is 4.31 times more volatile than CIBC Core Fixed. It trades about 0.17 of its potential returns per unit of risk. CIBC Core Fixed is currently generating about 0.09 per unit of risk. If you would invest  2,769  in Purpose Diversified Real on April 21, 2025 and sell it today you would earn a total of  214.00  from holding Purpose Diversified Real or generate 7.73% return on investment over 90 days.

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

Purpose Diversified Real  vs.  CIBC Core Fixed

Purpose Diversified Real

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Diversified Real are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Purpose Diversified may actually be approaching a critical reversion point that can send shares even higher in August 2025.

CIBC Core Fixed

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Core Fixed are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CIBC Core is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Purpose Diversified and CIBC Core

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

The idea behind Purpose Diversified Real and CIBC Core Fixed 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.