Correlation Between Canadian Tire and Roots Corp
Can any of the company-specific risk be diversified away by investing in both Canadian Tire and Roots Corp 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 Tire and Roots Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Tire and Roots Corp, you can compare the effects of market volatilities on Canadian Tire and Roots Corp 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 Tire with a short position of Roots Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Tire and Roots Corp.
Diversification Opportunities for Canadian Tire and Roots Corp
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canadian and Roots is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Tire and Roots Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roots Corp and Canadian Tire 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 Tire are associated (or correlated) with Roots Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roots Corp has no effect on the direction of Canadian Tire i.e., Canadian Tire and Roots Corp go up and down completely randomly.
Pair Corralation between Canadian Tire and Roots Corp
Assuming the 90 days trading horizon Canadian Tire is expected to under-perform the Roots Corp. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Tire is 1.26 times less risky than Roots Corp. The stock trades about -0.14 of its potential returns per unit of risk. The Roots Corp is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 332.00 in Roots Corp on November 16, 2025 and sell it today you would lose (32.00) from holding Roots Corp or give up 9.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Tire vs. Roots Corp
Performance |
| Timeline |
| Canadian Tire |
| Roots Corp |
Canadian Tire and Roots Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Tire and Roots Corp
The main advantage of trading using opposite Canadian Tire and Roots Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Tire position performs unexpectedly, Roots Corp 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 Roots Corp will offset losses from the drop in Roots Corp's long position.| Canadian Tire vs. Aritzia | Canadian Tire vs. BRP Inc | Canadian Tire vs. CCL Industries | Canadian Tire vs. Leons Furniture Limited |
| Roots Corp vs. Reitmans Limited | Roots Corp vs. Reitmans Canada | Roots Corp vs. Transat AT | Roots Corp vs. Supremex |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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