Correlation Between GoldMining and Canadian Tire

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

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

Diversification Opportunities for GoldMining and Canadian Tire

-0.81

Correlation Coefficient

GoldMining  Canadian Tire

Pay attention - limited upside

The 3 months correlation between GoldMining and Canadian is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Canadian Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Tire and GoldMining 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 GoldMining 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 GoldMining i.e., GoldMining and Canadian Tire go up and down completely randomly.

Pair Corralation between GoldMining and Canadian Tire

Assuming the 90 days trading horizon GoldMining is expected to under-perform the Canadian Tire. In addition to that, GoldMining is 2.16 times more volatile than Canadian Tire. It trades about -0.07 of its total potential returns per unit of risk. Canadian Tire is currently generating about 0.45 per unit of volatility. If you would invest  14,619  in Canadian Tire on April 21, 2025 and sell it today you would earn a total of  4,485  from holding Canadian Tire or generate 30.68% return on investment over 90 days.

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

GoldMining  vs.  Canadian Tire

GoldMining

Risk-Adjusted Performance

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 35 (%) 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.

Pair Trading with GoldMining and Canadian Tire

The main advantage of trading using opposite GoldMining and Canadian Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining 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 GoldMining 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.