Correlation Between CN MODERN and Canadian Tire
Can any of the company-specific risk be diversified away by investing in both CN MODERN and Canadian Tire 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 CN MODERN and Canadian Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and Canadian Tire Corp, you can compare the effects of market volatilities on CN MODERN and Canadian Tire 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 CN MODERN with a short position of Canadian Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Canadian Tire.
Diversification Opportunities for CN MODERN and Canadian Tire
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 07M and Canadian is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Canadian Tire Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Tire Corp and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with Canadian Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Tire Corp has no effect on the direction of CN MODERN i.e., CN MODERN and Canadian Tire go up and down completely randomly.
Pair Corralation between CN MODERN and Canadian Tire
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to under-perform the Canadian Tire. In addition to that, CN MODERN is 1.87 times more volatile than Canadian Tire Corp. It trades about -0.02 of its total potential returns per unit of risk. Canadian Tire Corp is currently generating about 0.21 per unit of volatility. If you would invest 9,835 in Canadian Tire Corp on September 2, 2024 and sell it today you would earn a total of 405.00 from holding Canadian Tire Corp or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. Canadian Tire Corp
Performance |
| Timeline |
| CN MODERN DAIRY |
| Canadian Tire Corp |
CN MODERN and Canadian Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and Canadian Tire
The main advantage of trading using opposite CN MODERN and Canadian Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, Canadian Tire 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 Canadian Tire will offset losses from the drop in Canadian Tire's long position.| CN MODERN vs. SIVERS SEMICONDUCTORS AB | CN MODERN vs. Darden Restaurants | CN MODERN vs. Reliance Steel Aluminum | CN MODERN vs. Q2M Managementberatung AG |
| Canadian Tire vs. SBM OFFSHORE | Canadian Tire vs. PT Indofood Sukses | Canadian Tire vs. CN MODERN DAIRY | Canadian Tire vs. SENECA FOODS A |
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 CEOs Directory module to screen CEOs from public companies around the world.
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