Correlation Between Amazon CDR and Canadian Tire

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

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

Diversification Opportunities for Amazon CDR and Canadian Tire

0.2

Correlation Coefficient

Amazon CDR  Canadian Tire

Modest diversification

The 3 months correlation between Amazon and Canadian is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Canadian Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Tire and Amazon CDR 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 Amazon CDR 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 Amazon CDR i.e., Amazon CDR and Canadian Tire go up and down completely randomly.

Pair Corralation between Amazon CDR and Canadian Tire

Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.12 times more return on investment than Canadian Tire. However, Amazon CDR is 1.12 times more volatile than Canadian Tire. It trades about -0.04 of its potential returns per unit of risk. Canadian Tire is currently generating about -0.09 per unit of risk. If you would invest  2,684  in Amazon CDR on July 23, 2025 and sell it today you would lose (157.00) from holding Amazon CDR or give up 5.85% of portfolio value over 90 days.

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

Amazon CDR  vs.  Canadian Tire

Amazon CDR

Risk-Adjusted Performance

Weakest

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

Canadian Tire

Risk-Adjusted Performance

Weakest

Over the last 90 days Canadian Tire has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Amazon CDR and Canadian Tire

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

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.