Correlation Between Canadian Tire and Gamehost

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

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

Diversification Opportunities for Canadian Tire and Gamehost

0.9

Correlation Coefficient

Canadian Tire  Gamehost

Almost no diversification

The 3 months correlation between Canadian and Gamehost is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Tire and Gamehost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamehost 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 Gamehost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamehost has no effect on the direction of Canadian Tire i.e., Canadian Tire and Gamehost go up and down completely randomly.

Pair Corralation between Canadian Tire and Gamehost

Assuming the 90 days trading horizon Canadian Tire is expected to generate 1.02 times less return on investment than Gamehost. In addition to that, Canadian Tire is 1.06 times more volatile than Gamehost. It trades about 0.39 of its total potential returns per unit of risk. Gamehost is currently generating about 0.42 per unit of volatility. If you would invest  985.00  in Gamehost on May 1, 2025 and sell it today you would earn a total of  245.00  from holding Gamehost or generate 24.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Canadian Tire  vs.  Gamehost

Canadian Tire

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Tire are ranked lower than 30 (%) 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.

Gamehost

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Gamehost are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Gamehost displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian Tire and Gamehost

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

The idea behind Canadian Tire and Gamehost 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.