Correlation Between Canadian Imperial and Nio
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Nio 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 Canadian Imperial and Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Imperial Bank and Nio Class A, you can compare the effects of market volatilities on Canadian Imperial and Nio 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 Canadian Imperial with a short position of Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Nio.
Diversification Opportunities for Canadian Imperial and Nio
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Canadian and Nio is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A and Canadian Imperial 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 Canadian Imperial Bank are associated (or correlated) with Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Nio go up and down completely randomly.
Pair Corralation between Canadian Imperial and Nio
Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to generate 0.25 times more return on investment than Nio. However, Canadian Imperial Bank is 3.95 times less risky than Nio. It trades about -0.17 of its potential returns per unit of risk. Nio Class A is currently generating about -0.25 per unit of risk. If you would invest 4,966 in Canadian Imperial Bank on January 25, 2024 and sell it today you would lose (164.00) from holding Canadian Imperial Bank or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. Nio Class A
Performance |
| Timeline |
| Canadian Imperial Bank |
| Nio Class A |
Canadian Imperial and Nio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Nio
The main advantage of trading using opposite Canadian Imperial and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Nio 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 Nio will offset losses from the drop in Nio's long position.| Canadian Imperial vs. Bank of Montreal | Canadian Imperial vs. Toronto Dominion Bank | Canadian Imperial vs. Royal Bank of | Canadian Imperial vs. Citigroup |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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