Correlation Between Canadian Tire and Nutrien

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

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

Diversification Opportunities for Canadian Tire and Nutrien

0.83

Correlation Coefficient

Canadian Tire  Nutrien

Very poor diversification

The 3 months correlation between Canadian and Nutrien is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Tire and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien 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 Nutrien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutrien has no effect on the direction of Canadian Tire i.e., Canadian Tire and Nutrien go up and down completely randomly.

Pair Corralation between Canadian Tire and Nutrien

Assuming the 90 days trading horizon Canadian Tire is expected to generate 0.68 times more return on investment than Nutrien. However, Canadian Tire is 1.48 times less risky than Nutrien. It trades about 0.43 of its potential returns per unit of risk. Nutrien is currently generating about 0.14 per unit of risk. If you would invest  14,983  in Canadian Tire on April 22, 2025 and sell it today you would earn a total of  4,121  from holding Canadian Tire or generate 27.5% return on investment over 90 days.

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

Canadian Tire  vs.  Nutrien

Canadian Tire

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Tire are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Canadian Tire unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nutrien

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nutrien are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Nutrien may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Canadian Tire and Nutrien

The main advantage of trading using opposite Canadian Tire and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Tire position performs unexpectedly, Nutrien 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 Nutrien will offset losses from the drop in Nutrien's long position.

The idea behind Canadian Tire and Nutrien 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.