Correlation Between First Asset and CI Preferred

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

By analyzing existing cross correlation between First Asset Morningstar and CI Preferred Share, you can compare the effects of market volatilities on First Asset and CI Preferred 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 First Asset with a short position of CI Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and CI Preferred.

Diversification Opportunities for First Asset and CI Preferred

0.95

Correlation Coefficient

First Asset  CI Preferred

Almost no diversification

The 3 months correlation between First and FPR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Morningstar and CI Preferred Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Preferred Share and First Asset 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 First Asset Morningstar are associated (or correlated) with CI Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Preferred Share has no effect on the direction of First Asset i.e., First Asset and CI Preferred go up and down completely randomly.

Pair Corralation between First Asset and CI Preferred

Assuming the 90 days trading horizon First Asset Morningstar is expected to generate 1.33 times more return on investment than CI Preferred. However, First Asset is 1.33 times more volatile than CI Preferred Share. It trades about 0.4 of its potential returns per unit of risk. CI Preferred Share is currently generating about 0.35 per unit of risk. If you would invest  4,209  in First Asset Morningstar on April 21, 2025 and sell it today you would earn a total of  723.00  from holding First Asset Morningstar or generate 17.18% return on investment over 90 days.

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

First Asset Morningstar  vs.  CI Preferred Share

First Asset Morningstar

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Morningstar are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, First Asset displayed solid returns over the last few months and may actually be approaching a breakup point.

CI Preferred Share

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CI Preferred Share are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Preferred may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with First Asset and CI Preferred

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

The idea behind First Asset Morningstar and CI Preferred Share 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.