Correlation Between Canadian Tire and BORR DRILLING
Can any of the company-specific risk be diversified away by investing in both Canadian Tire and BORR DRILLING 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 BORR DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Tire Corp and BORR DRILLING NEW, you can compare the effects of market volatilities on Canadian Tire and BORR DRILLING 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 BORR DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Tire and BORR DRILLING.
Diversification Opportunities for Canadian Tire and BORR DRILLING
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canadian and BORR is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Tire Corp and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW 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 Corp are associated (or correlated) with BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of Canadian Tire i.e., Canadian Tire and BORR DRILLING go up and down completely randomly.
Pair Corralation between Canadian Tire and BORR DRILLING
Assuming the 90 days trading horizon Canadian Tire Corp is expected to generate 0.26 times more return on investment than BORR DRILLING. However, Canadian Tire Corp is 3.84 times less risky than BORR DRILLING. It trades about 0.07 of its potential returns per unit of risk. BORR DRILLING NEW is currently generating about -0.01 per unit of risk. If you would invest 10,190 in Canadian Tire Corp on September 13, 2024 and sell it today you would earn a total of 160.00 from holding Canadian Tire Corp or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Canadian Tire Corp vs. BORR DRILLING NEW
Performance |
| Timeline |
| Canadian Tire Corp |
| BORR DRILLING NEW |
Canadian Tire and BORR DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Tire and BORR DRILLING
The main advantage of trading using opposite Canadian Tire and BORR DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Tire position performs unexpectedly, BORR DRILLING 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 BORR DRILLING will offset losses from the drop in BORR DRILLING's long position.| Canadian Tire vs. BORR DRILLING NEW | Canadian Tire vs. SEI INVESTMENTS | Canadian Tire vs. Algonquin Power Utilities | Canadian Tire vs. WisdomTree Investments |
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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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