Correlation Between Canadian Imperial and Root

Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Root 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 Root 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 Root Inc, you can compare the effects of market volatilities on Canadian Imperial and Root 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 Root. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Root.

Diversification Opportunities for Canadian Imperial and Root

-0.68

Correlation Coefficient

Canadian Imperial  Root

Excellent diversification

The 3 months correlation between Canadian and Root is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Root Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Root Inc 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 Root. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Root Inc has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Root go up and down completely randomly.

Pair Corralation between Canadian Imperial and Root

Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to generate 0.14 times more return on investment than Root. However, Canadian Imperial Bank is 7.1 times less risky than Root. It trades about 0.27 of its potential returns per unit of risk. Root Inc is currently generating about -0.11 per unit of risk. If you would invest  6,567  in Canadian Imperial Bank on May 16, 2025 and sell it today you would earn a total of  816.00  from holding Canadian Imperial Bank or generate 12.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Canadian Imperial Bank  vs.  Root Inc

Canadian Imperial Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Imperial Bank are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Canadian Imperial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Root Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Root Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Canadian Imperial and Root

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

The idea behind Canadian Imperial Bank and Root Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.