Correlation Between TMX Group and CI Financial

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

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

Diversification Opportunities for TMX Group and CI Financial

0.74

Correlation Coefficient

TMX Group  CI Financial

Poor diversification

The 3 months correlation between TMX and CIX is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding TMX Group Limited and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial Corp and TMX Group 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 TMX Group Limited are associated (or correlated) with CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of TMX Group i.e., TMX Group and CI Financial go up and down completely randomly.

Pair Corralation between TMX Group and CI Financial

Given the investment horizon of 90 days TMX Group Limited is expected to generate 10.02 times more return on investment than CI Financial. However, TMX Group is 10.02 times more volatile than CI Financial Corp. It trades about 0.1 of its potential returns per unit of risk. CI Financial Corp is currently generating about 0.22 per unit of risk. If you would invest  5,232  in TMX Group Limited on April 22, 2025 and sell it today you would earn a total of  416.00  from holding TMX Group Limited or generate 7.95% return on investment over 90 days.

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

TMX Group Limited  vs.  CI Financial Corp

TMX Group Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TMX Group Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TMX Group may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 17 (%) 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.

Pair Trading with TMX Group and CI Financial

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

The idea behind TMX Group Limited and CI Financial 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.