Correlation Between Algonquin Power and Canadian Tire
Can any of the company-specific risk be diversified away by investing in both Algonquin Power 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 Algonquin Power and Canadian Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algonquin Power Utilities and Canadian Tire Corp, you can compare the effects of market volatilities on Algonquin Power 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 Algonquin Power with a short position of Canadian Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Canadian Tire.
Diversification Opportunities for Algonquin Power and Canadian Tire
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algonquin and Canadian is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities 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 Algonquin Power 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 Algonquin Power Utilities 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 Algonquin Power i.e., Algonquin Power and Canadian Tire go up and down completely randomly.
Pair Corralation between Algonquin Power and Canadian Tire
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the Canadian Tire. In addition to that, Algonquin Power is 1.48 times more volatile than Canadian Tire Corp. It trades about -0.04 of its total potential returns per unit of risk. Canadian Tire Corp is currently generating about 0.05 per unit of volatility. If you would invest 8,975 in Canadian Tire Corp on September 14, 2024 and sell it today you would earn a total of 1,395 from holding Canadian Tire Corp or generate 15.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Canadian Tire Corp
Performance |
| Timeline |
| Algonquin Power Utilities |
| Canadian Tire Corp |
Algonquin Power and Canadian Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Canadian Tire
The main advantage of trading using opposite Algonquin Power and Canadian Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power 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.| Algonquin Power vs. Superior Plus Corp | Algonquin Power vs. SIVERS SEMICONDUCTORS AB | Algonquin Power vs. Norsk Hydro ASA | Algonquin Power vs. Reliance Steel Aluminum |
| Canadian Tire vs. JLF INVESTMENT | Canadian Tire vs. PennantPark Investment | Canadian Tire vs. PKSHA TECHNOLOGY INC | Canadian Tire vs. EAT WELL INVESTMENT |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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