Correlation Between Canadian Imperial and North West
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and North West 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 North West 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 North West, you can compare the effects of market volatilities on Canadian Imperial and North West 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 North West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and North West.
Diversification Opportunities for Canadian Imperial and North West
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and North is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and North West in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North West 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 North West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North West has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and North West go up and down completely randomly.
Pair Corralation between Canadian Imperial and North West
Assuming the 90 days trading horizon Canadian Imperial Bank is expected to generate 0.32 times more return on investment than North West. However, Canadian Imperial Bank is 3.11 times less risky than North West. It trades about 0.09 of its potential returns per unit of risk. North West is currently generating about 0.0 per unit of risk. If you would invest 2,534 in Canadian Imperial Bank on September 2, 2025 and sell it today you would earn a total of 54.00 from holding Canadian Imperial Bank or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. North West
Performance |
| Timeline |
| Canadian Imperial Bank |
| North West |
Canadian Imperial and North West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and North West
The main advantage of trading using opposite Canadian Imperial and North West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, North West 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 North West will offset losses from the drop in North West's long position.| Canadian Imperial vs. Enbridge Pref 5 | Canadian Imperial vs. Enbridge Pref 11 | Canadian Imperial vs. Enbridge Pref L | Canadian Imperial vs. E Split Corp |
| North West vs. Diamond Estates Wines | North West vs. Air Canada | North West vs. Omineca Mining and | North West vs. Micron Technology, |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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