Correlation Between IShares Core and CIBC Premium

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

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

Diversification Opportunities for IShares Core and CIBC Premium

-0.33

Correlation Coefficient

IShares Core  CIBC Premium

Very good diversification

The 3 months correlation between IShares and CIBC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SPTSX and CIBC Premium Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Premium Cash and IShares Core 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 iShares Core SPTSX are associated (or correlated) with CIBC Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Premium Cash has no effect on the direction of IShares Core i.e., IShares Core and CIBC Premium go up and down completely randomly.

Pair Corralation between IShares Core and CIBC Premium

Assuming the 90 days trading horizon iShares Core SPTSX is expected to generate 16.41 times more return on investment than CIBC Premium. However, IShares Core is 16.41 times more volatile than CIBC Premium Cash. It trades about 0.46 of its potential returns per unit of risk. CIBC Premium Cash is currently generating about 0.39 per unit of risk. If you would invest  3,879  in iShares Core SPTSX on April 23, 2025 and sell it today you would earn a total of  479.00  from holding iShares Core SPTSX or generate 12.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.81%
Values	Daily Returns

iShares Core SPTSX  vs.  CIBC Premium Cash

iShares Core SPTSX

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SPTSX are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in August 2025.

CIBC Premium Cash

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Premium Cash are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CIBC Premium is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and CIBC Premium

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

The idea behind iShares Core SPTSX and CIBC Premium Cash 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.