Correlation Between Canadian Tire and Walmart
Can any of the company-specific risk be diversified away by investing in both Canadian Tire and Walmart 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 Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Tire and Walmart Inc CDR, you can compare the effects of market volatilities on Canadian Tire and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Tire and Walmart.
Diversification Opportunities for Canadian Tire and Walmart
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and Walmart is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Tire and Walmart Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart Inc CDR 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart Inc CDR has no effect on the direction of Canadian Tire i.e., Canadian Tire and Walmart go up and down completely randomly.
Pair Corralation between Canadian Tire and Walmart
Assuming the 90 days trading horizon Canadian Tire is expected to generate 4.41 times less return on investment than Walmart. In addition to that, Canadian Tire is 1.21 times more volatile than Walmart Inc CDR. It trades about 0.02 of its total potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.13 per unit of volatility. If you would invest 2,077 in Walmart Inc CDR on September 26, 2024 and sell it today you would earn a total of 1,939 from holding Walmart Inc CDR or generate 93.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Canadian Tire vs. Walmart Inc CDR
Performance |
Timeline |
Canadian Tire |
Walmart Inc CDR |
Canadian Tire and Walmart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Canadian Tire and Walmart
The main advantage of trading using opposite Canadian Tire and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Tire position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.Canadian Tire vs. Apple Inc CDR | Canadian Tire vs. Microsoft Corp CDR | Canadian Tire vs. NVIDIA CDR | Canadian Tire vs. Amazon CDR |
Walmart vs. Canadian Tire | Walmart vs. Loblaw Companies Limited | Walmart vs. Metro Inc | Walmart vs. Restaurant Brands International |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |