Correlation Between Canadian Tire and BURLINGTON STORES
Can any of the company-specific risk be diversified away by investing in both Canadian Tire and BURLINGTON STORES 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 BURLINGTON STORES 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 BURLINGTON STORES, you can compare the effects of market volatilities on Canadian Tire and BURLINGTON STORES 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 BURLINGTON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Tire and BURLINGTON STORES.
Diversification Opportunities for Canadian Tire and BURLINGTON STORES
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canadian and BURLINGTON is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Tire Corp and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES 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 BURLINGTON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BURLINGTON STORES has no effect on the direction of Canadian Tire i.e., Canadian Tire and BURLINGTON STORES go up and down completely randomly.
Pair Corralation between Canadian Tire and BURLINGTON STORES
Assuming the 90 days trading horizon Canadian Tire is expected to generate 5.99 times less return on investment than BURLINGTON STORES. But when comparing it to its historical volatility, Canadian Tire Corp is 2.03 times less risky than BURLINGTON STORES. It trades about 0.03 of its potential returns per unit of risk. BURLINGTON STORES is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 24,200 in BURLINGTON STORES on September 2, 2024 and sell it today you would earn a total of 3,000 from holding BURLINGTON STORES or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Tire Corp vs. BURLINGTON STORES
Performance |
| Timeline |
| Canadian Tire Corp |
| BURLINGTON STORES |
Canadian Tire and BURLINGTON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Tire and BURLINGTON STORES
The main advantage of trading using opposite Canadian Tire and BURLINGTON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Tire position performs unexpectedly, BURLINGTON STORES 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 BURLINGTON STORES will offset losses from the drop in BURLINGTON STORES's long position.| Canadian Tire vs. NURAN WIRELESS INC | Canadian Tire vs. Ribbon Communications | Canadian Tire vs. Tower One Wireless | Canadian Tire vs. Casio Computer CoLtd |
| BURLINGTON STORES vs. SIVERS SEMICONDUCTORS AB | BURLINGTON STORES vs. Darden Restaurants | BURLINGTON STORES vs. Reliance Steel Aluminum | BURLINGTON STORES vs. Q2M Managementberatung AG |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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