Correlation Between IShares SPTSX and CIBC Qx

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

By analyzing existing cross correlation between iShares SPTSX 60 and CIBC Qx Low, you can compare the effects of market volatilities on IShares SPTSX and CIBC Qx 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 SPTSX with a short position of CIBC Qx. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and CIBC Qx.

Diversification Opportunities for IShares SPTSX and CIBC Qx

-0.15

Correlation Coefficient

IShares SPTSX  CIBC Qx

Good diversification

The 3 months correlation between IShares and CIBC is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX 60 and CIBC Qx Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Qx Low and IShares SPTSX 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 SPTSX 60 are associated (or correlated) with CIBC Qx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Qx Low has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and CIBC Qx go up and down completely randomly.

Pair Corralation between IShares SPTSX and CIBC Qx

Assuming the 90 days trading horizon iShares SPTSX 60 is expected to generate 0.71 times more return on investment than CIBC Qx. However, iShares SPTSX 60 is 1.42 times less risky than CIBC Qx. It trades about 0.38 of its potential returns per unit of risk. CIBC Qx Low is currently generating about -0.01 per unit of risk. If you would invest  3,698  in iShares SPTSX 60 on April 23, 2025 and sell it today you would earn a total of  415.00  from holding iShares SPTSX 60 or generate 11.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

iShares SPTSX 60  vs.  CIBC Qx Low

iShares SPTSX 60

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX 60 are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares SPTSX may actually be approaching a critical reversion point that can send shares even higher in August 2025.

CIBC Qx Low

Risk-Adjusted Performance

Very Weak

Over the last 90 days CIBC Qx Low has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CIBC Qx is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares SPTSX and CIBC Qx

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

The idea behind iShares SPTSX 60 and CIBC Qx Low 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.