Correlation Between Forstrong Global and Canadian Tire

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

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

Diversification Opportunities for Forstrong Global and Canadian Tire

-0.19

Correlation Coefficient

Forstrong Global  Canadian Tire

Good diversification

The 3 months correlation between Forstrong and Canadian is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income and Canadian Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Tire and Forstrong Global 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 Forstrong Global Income 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 has no effect on the direction of Forstrong Global i.e., Forstrong Global and Canadian Tire go up and down completely randomly.

Pair Corralation between Forstrong Global and Canadian Tire

Assuming the 90 days trading horizon Forstrong Global Income is expected to under-perform the Canadian Tire. But the etf apears to be less risky and, when comparing its historical volatility, Forstrong Global Income is 2.76 times less risky than Canadian Tire. The etf trades about 0.0 of its potential returns per unit of risk. The Canadian Tire is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  15,680  in Canadian Tire on October 22, 2024 and sell it today you would earn a total of  419.00  from holding Canadian Tire or generate 2.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Forstrong Global Income  vs.  Canadian Tire

Forstrong Global Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forstrong Global Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Forstrong Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Canadian Tire

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Tire are ranked lower than 3 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Forstrong Global and Canadian Tire

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

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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.