Correlation Between Canadian Imperial and MetLife
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and MetLife 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 MetLife 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 MetLife, you can compare the effects of market volatilities on Canadian Imperial and MetLife 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 MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and MetLife.
Diversification Opportunities for Canadian Imperial and MetLife
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Canadian and MetLife is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife 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 MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and MetLife go up and down completely randomly.
Pair Corralation between Canadian Imperial and MetLife
Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to under-perform the MetLife. In addition to that, Canadian Imperial is 1.08 times more volatile than MetLife. It trades about -0.18 of its total potential returns per unit of risk. MetLife is currently generating about -0.17 per unit of volatility. If you would invest 7,240 in MetLife on January 19, 2024 and sell it today you would lose (241.00) from holding MetLife or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. MetLife
Performance |
| Timeline |
| Canadian Imperial Bank |
| MetLife |
Canadian Imperial and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and MetLife
The main advantage of trading using opposite Canadian Imperial and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, MetLife 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 MetLife will offset losses from the drop in MetLife'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 |
| MetLife vs. Lincoln National | MetLife vs. Aflac Incorporated | MetLife vs. Unum Group | MetLife vs. Manulife Financial Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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