Correlation Between AGNC INVESTMENT and Canadian Tire

Can any of the company-specific risk be diversified away by investing in both AGNC INVESTMENT 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 AGNC INVESTMENT and Canadian Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGNC INVESTMENT and Canadian Tire Corp, you can compare the effects of market volatilities on AGNC INVESTMENT 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 AGNC INVESTMENT with a short position of Canadian Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGNC INVESTMENT and Canadian Tire.

Diversification Opportunities for AGNC INVESTMENT and Canadian Tire

0.7

Correlation Coefficient

AGNC INVESTMENT  Canadian Tire

Poor diversification

The 3 months correlation between AGNC and Canadian is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding AGNC INVESTMENT 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 AGNC INVESTMENT 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 AGNC INVESTMENT 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 AGNC INVESTMENT i.e., AGNC INVESTMENT and Canadian Tire go up and down completely randomly.

Pair Corralation between AGNC INVESTMENT and Canadian Tire

Assuming the 90 days trading horizon AGNC INVESTMENT is expected to generate 1.06 times more return on investment than Canadian Tire. However, AGNC INVESTMENT is 1.06 times more volatile than Canadian Tire Corp. It trades about 0.08 of its potential returns per unit of risk. Canadian Tire Corp is currently generating about 0.08 per unit of risk. If you would invest  887.00  in AGNC INVESTMENT on October 25, 2024 and sell it today you would earn a total of  50.00  from holding AGNC INVESTMENT or generate 5.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AGNC INVESTMENT  vs.  Canadian Tire Corp

AGNC INVESTMENT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC INVESTMENT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AGNC INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Canadian Tire Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Tire Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Canadian Tire is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AGNC INVESTMENT and Canadian Tire

The main advantage of trading using opposite AGNC INVESTMENT and Canadian Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGNC INVESTMENT 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.

The idea behind AGNC INVESTMENT and Canadian Tire Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.